Klarna Unveils New Products Ahead of Much Anticipated IPO

Swedish fintech firm Klarna has launched two new products, a cashback offering and a personal checking account. The new products are designed to reward users for shopping through its app. The company unveiled the new products ahead of the much anticipated $20 billion Klarna IPO.

Klarna is popular for its buy now, pay later loans that allow users to pay for products through interest-free installments. According to CNBC, the fintech company launched new products to encourage users to shift their saving and spending transactions on its platform.

New Opportunity

Klarna is rolling out the new products in 12 markets in Europe and the U.S. The company says the products will be reflected as ‘cashback’ and ‘balance’ on the Klarna App. According to Klarna’s founder and CEO, Sebastian Siemiatkowski, the products allow users to earn some money as they shop.

“These new products make it easier for customers to manage multiple scheduled payments, helping our customers use Klarna for more frequent purchases and driving loyalty. Klarna wants to support all consumers with their everyday spending and allow people to earn money while they shop and manage it in a Klarna account,” Siemiatkowski told CNBC.

EU customers will earn up to 3.58% interest on deposits made on Klarna. However, U.S. customers will not earn interest on deposits. In Ireland, Klarna will be competing with Revolut which is already offering interest-earning accounts to users. Revolut received a U.K. banking license last year.

Key Features

The new Klarna balance feature will allow users to keep their money in a personal account that’s very similar to a bank. They can use their deposits to purchase items and pay their buy now, pay later loans. Klarna users will also receive refunds directly in their accounts for any returned items.

The cashback feature allows users to earn rewards. Users can get up to 10% of the value of items they purchase from participating retailers as Klarna cashback rewards. The money earned is automatically deposited in their balance account.

This isn’t the first time that Klarna is offering conventional banking services. The fintech company has been offering savings and account products in Germany since 2021.

Klarna IPO

The unveiling of the two products is a major step for Klarna’s range of products as its U.S initial public offer draws closer. The company has not set a timeline for the stock market listing, but the company says the IPO could still happen this year. Early this year, Siemiatkowski gave the Klarna IPO update during a CNBC interview.

“We still have a few steps and work ahead of ourselves. But we’re keen on becoming a public company,” he said.

Klarna’s IPO valuation on the secondary market stands at billions of dollars. Currently, the fintech company is talking to investors about a share sale to provide it with some liquidity.