Klarna Bets Big on Europe Following Value Plunge

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In the ever-evolving landscape of financial technology, Swedish company Klarna, a prominent player in the buy now, pay later (BNPL) sector, has experienced a rollercoaster journey. After seeing a dramatic surge in popularity during the COVID-19 lockdowns, which subsequently propelled its valuation to an impressive $45.6 billion in 2021, the company faced a steep 85% drop in value just a year later due to challenging market conditions in the tech world. However, in a remarkable turnaround, Klarna is now witnessing robust growth in several regions, making strategic plans to leverage this momentum.

The second quarter of 2023 saw Klarna’s gross merchandise value, which indicates the volume of sales made through its platform, grow by 26% in the U.K alone, and a growth of 14% across all of Europe compared to the same period a year earlier. This growth comes as Klarna grapples with a significant drop in its valuation and as consumers worldwide reel under the pressure of rising interest rates and persistent inflation. Yet, Klarna seems to be bucking the trend, with CEO Sebastian Siemiatkowski expressing excitement over the sustained growth across Europe and plans to further strengthen their position in the region and the U.S.

Klarna’s Rise Amid Global Challenges

Swedish fintech company Klarna, popular for its buy-now-pay-later (BNPL) services, is experiencing a surge in growth in several regions, despite an 85% drop in its valuation in 2022 as a result of challenging tech market conditions.

Riding the Wave of Growth

In the second quarter of 2023, Klarna recorded a 26% increase in gross merchandise value in the UK alone, and a 14% increase across all of Europe compared to the same period the previous year. This growth is noteworthy, considering it comes at a time when global consumers are cutting back on spending due to rising interest rates and persistent inflation.

Sebastian Siemiatkowski, Klarna’s CEO, expressed his excitement over the company’s sustained growth across Europe. He emphasized the company’s commitment to strengthening its position in Europe and the U.S, even as smaller players reduce their commitment or exit the region.

Factors Contributing to Klarna’s Success

Several factors have contributed to Klarna’s recent success. These include increased awareness about accessing credit through BNPL, the withdrawal of competitors like ClearPay from the European market, and new partnerships with luxury London store Liberty and theme park Paulton’s Park. The average age of Klarna’s UK users is 36, slightly lower than the global average of 40 years.

Earlier this year, Klarna raised $800 million to expand its footprint in the U.S., its largest market by revenue, where it has about 34 million users. This is nearly double the size of its UK market, which consists of 18 million users.

BNPL Phenomenon and Controversy

BNPL services have become increasingly popular among younger, social media-savvy demographics, particularly in Britain where many are grappling with the country’s worst cost of living crisis in decades. Despite this popularity, BNPL services like Klarna have faced criticism for potentially encouraging overspending and leading to excessive debt among young people.

However, it’s not just younger generations that are drawn to these services. Klarna reports that its fastest-growing user base is the 57-plus year-old category.

Regulatory Hurdles

Even as it grows, Klarna faces the challenge of increased regulation. The UK Treasury has proposed legislation that would give the Financial Conduct Authority greater power to regulate firms like Klarna. If implemented, the new regulations could slow down the process for consumers and make the service less seamless, according to Klarna.

Despite these potential hurdles, Klarna continues to gain traction. The popularity of BNPL services is expected to increase significantly in the coming years, with global BNPL transactions projected to rise from $309 billion in 2023 to $566 billion in 2026, according to GlobalData.


Klarna’s growth in challenging global conditions is a testament to its resilience and ability to adapt. The company’s success, despite criticism and regulatory hurdles, demonstrates the increasing popularity of BNPL services. However, as these services continue to grow, it’s essential for both consumers and service providers to navigate the potential pitfalls responsibly.

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