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Klarna

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Klarna Bank AB
Company typePrivate
Industry[Finance]
Founded2005; 19 years ago (2005)
Founders
HeadquartersStockholm, Sweden
Key people
RevenueIncrease 23.5 billion kr (2023)
Negative increase −3.2 billion kr (2023)
Negative increase −2.5 billion kr (2023)
Total assetsIncrease 137 billion kr (2023)
Total equityIncrease 14.7 billion kr (2023)
Owners
Number of employees
4,201 (2023)
Websiteklarna.com
Footnotes / references
[1][2][3]

Klarna Bank AB, commonly referred to as Klarna, is a Swedish fintech company that provides online financial services. The company provides payment processing services for the e-commerce industry, managing store claims and customer payments.[4] The company is a "buy now, pay later" service provider.[5]

The company has more than 5,000 employees, most of them working at the headquarters in Stockholm and Berlin. In 2021, the company handled about US$80 billion in online sales.[1] As of 2011, about 40% of all e-commerce sales in Sweden went through Klarna.[6] In 2021, the company was Europe's most valuable private tech company, at a $45.6 billion valuation. However, their valuation was cut to $6.7 billion in 2022 after struggling to attract additional outside investment.[7][8][9][10]

History

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The three founders Sebastian Siemiatkowski, Niklas Adalberth and Victor Jacobsson founded Klarna in 2005 after participating in the Stockholm School of Economics annual entrepreneurship competition. [11][12][13] Angel investor Jane Walerud invested in their company and connected them with a team of programmers.[14]

In 2007, venture capital firm Investment AB Öresund invested in the company.[15] Three years later, Klarna started providing services in Norway, Finland, Denmark, Germany and the Netherlands. They also received an investment from Sequoia Capital,[16] and increased their revenue by over 80% to US$54 million (~400 million SEK).[17] In 2011, British newspaper The Telegraph listed Klarna as one of Europe's 100 most promising young tech companies.[18]

In 2011, growth equity firm General Atlantic led a $155 million investment round joined by DST Global, and General Atlantic's managing director Anton Levy joined the board of directors.[19][20] In May 2011, Klarna acquired Israeli company Analyzd, which provided risk management and fraud prevention services

In 2013, Klarna and German SOFORT AG [de] merged to become Klarna Group.[21]

Klarna launched in the United States in September 2015,[22] and the US has become its principal focus for future growth, after securing exclusive partnerships with luxury department store Macy's.[23][24][4][25] That year, Minister of Enterprise and Innovation Mikael Damberg dubbed Klarna one of Sweden's "five unicorns", by which he meant startup companies that had succeeded in growing and attracting international investments. The other four companies were Spotify, Mojang, Skype, and King.[26]

In September 2018, Klarna acquired Close Brothers Retail Finance from the UK Close Brothers Group.[27][28]

In 2019, Klarna raised $460 million with plans to expand its operations the US, with participation from Dragoneer Investment Group, Commonwealth Bank of Australia, HMI Capital, Merian Chysalis Investment Company Limited and others.[29] This funding round valued the company at $5.5 billion, making Klarna the largest fintech start-up in Europe.[30] In 2020, Klarna acquired Nuji, a marketplace for fashion and lifestyle goods.[31]

In 2020, Ant Financial, the payment affiliate of Chinese e-commerce company Alibaba, invested in Klarna as part of a partnership between the two firms.[32]

In June 2021, Klarna raised $639 million in a fundraising round led by SoftBank Group's Vision Fund 2, increasing the company's valuation to $45.6 billion.[33]

In November 2021, Klarna launched its physical card, which enabled users to make purchases in interest-free installments. [34] In January 2022, Klarna launched their physical card in the UK. [35] The card had a wait list of 400,000 users as of January 2022.[36]

In March 2022, Klarna acquired PriceRunner, a company that provides price comparisons on products.[37]

In May 2022, Klarna laid off roughly 10% of its workforce.[38][39]

In June 2022, Klarna announced a partnership deal with card issuer Marqeta to bring physical Visa cards to the US.[40]

In July 2022, Klarna raised $800 million in funding at a valuation of $6.7 billion. Their valuation dropped 85% in one year, in line with decreasing valuations of unprofitable technology companies.[9] Klarna lost $580 million between January and July 2022.[41] In September of that year, Klarna announced plans to lay off an additional 100 employees. The announcement came after budget revisions due to its drop in valuation and announced losses.

Since September 2022, Klarna offers savings accounts and deposits to Spanish customers through Raisin Bank [es; de].[42]

In October 2022, the company launched a new "Klarna Creator" application for retailers and influencers to collaborate on brand campaigns and to track their earnings.[43]

In January 2024, the company announced a plan for a monthly subscription plan ahead of an anticipated initial public offering later in the year. Users of the service, called Klarna Plus, would earn double the amount of usual reward points, attain access to a selection of discounts from partners like Nike and Instacart, and see service feeds waived when using the Klarna One Time Card. The fee would be $7.99 each month, as opposed to typical fees of $1 or $2 when using the service outside the network at retailers like Walmart or Costco. The company's Chief Marketing Officer, David Sandstrom, said there were also plans for a high-yield savings account in the US, with potential for subscribers to earn a higher rate than non-users.[44][45][46]

In February 2024, Klarna announced that AI replaced 700 employees at the company, about 10% of the workforce at the time.[47][48]

In November 2024, Klarna filed for an initial public offering in the USA.[49]

Controversy

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Regulation

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In the UK, Klarna operates in the rapidly growing post-payment sector which has been criticised for encouraging consumers to get themselves into unserviceable levels of debt.[50] In February 2021, the UK Government announced that the sector would be subject to regulation from the UK's Financial Conduct Authority.[51]

In Sweden a large number of complaints regarding Klarna were sent to the Swedish Consumer Agency in 2014. Many customers had received reminder fees and threats about debt collection without having received a proper invoice. It was speculated if this was an unethical business model since the company made money on these reminder fees and Klarna also had a subsidiary dedicated to debt collection. The Swedish Consumer Agency also found a reason to investigate how Klarna added credit fees for partial payments.[52] The year before the co-founder Niklas Adalberth said in a presentation during the startup conference Arctic15 that: "That is one of our revenue streams [...] the best customer is the one that doesn't pay directly but actually [gets] a reminder and then also debt collection because we are able to add the legal fees."[53]

In Germany, the District Court of Bremerhaven ruled in 2022 that Klarna could not demand a flat rate of €1.20 for a reminder by e-mail because Klarna had not submitted any corresponding costs.[54][55]

Privacy

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In February 2020, Der Spiegel reported that Klarna's autofill feature allowed anyone to extract personal information, such as phone number, postal address and date of birth, only based on the email address and postal code of a customer.[56]

In October 2020, Klarna mistakenly sent a marketing email to people who had never disclosed their contact information to Klarna. This triggered an investigation by the Information Commissioner's Office in the UK. [57]

For a brief period in May 2021, users could view the information of other users using their own login information. Klarna claims that user information was exposed randomly, and that these exposures only contained non-sensitive data. However, users claimed that they were able to view addresses, phone numbers, and payment details of other people.[58][59]

Identity thieves have used Klarna to commit fraud. They exploited Klarna's buy now, pay later scheme to make purchases with a small upfront payment on a stolen account, flip those goods at a much higher price, and then evade making payments.[60][61][62] The company stated that its fraud checks and controls are as strict as those of banks.[61]

In March 2022, the Swedish Authority for Privacy Protection (Integritetsskyddsmyndigheten) fined Klarna 7.5 million kr for inadequacies in its privacy notice and handling of personal data. Klarna stated it would appeal the decision for further clarification on the guidelines.[63][64]

Layoffs

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In May 2022, Siemiatkowski revealed it would be laying off more than 10% of its employees. A former employee described the layoffs as "chaotic". When Siemiatkowski posted a list of the fired employees on LinkedIn, several users described his post as "tone deaf".[65]

E-commerce scams

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Many Swedish e-commerce scams use Klarna as their payment solution.[66][67] Additionally, there are many cases of ID thefts, when Klarna is used to make transactions in other people's names.[68][69]

See also

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References

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  1. ^ a b "Klarna Bank AB 2023 Annual Report" (PDF) (pdf). Klarna. 28 February 2024. Archived (PDF) from the original on 20 May 2024. Retrieved 19 May 2024.
  2. ^ Milne, Richard (1 December 2020). "Michael Moritz named chairman of Swedish fintech Klarna". Financial Times. Archived from the original on 14 July 2022. Retrieved 14 July 2022.
  3. ^ Levingston, Ivan; Hammond, George; Milne, Richard; Quinio, Akila (9 March 2024). "Klarna's reclusive co-founder buys up shares using opaque structure". Financial Times. Archived from the original on 3 April 2024. Retrieved 20 May 2024.
  4. ^ a b "About us". Klarna US. Archived from the original on 1 March 2021. Retrieved 27 September 2021.
  5. ^ Milne, Richard (5 March 2013). "A Swedish take on 'buy now, pay later'". Financial Times. Archived from the original on 27 September 2021. Retrieved 27 September 2021.
  6. ^ "E-barometern". Archived from the original on 7 August 2011. Retrieved 22 August 2011.
  7. ^ "Klarna's valuation crashes to under $7bn in tough funding round". Financial Times. 11 July 2022. Archived from the original on 11 July 2022. Retrieved 11 July 2022.
  8. ^ "Klarna sees its value slashed by 85% in latest round of fundraising". the Guardian. 11 July 2022. Archived from the original on 26 November 2022. Retrieved 26 November 2022.
  9. ^ a b Mukherjee, Supantha (11 July 2022). "Klarna raises $800 million as valuation plunges 85% in a year". Reuters. Archived from the original on 26 November 2022. Retrieved 26 November 2022.
  10. ^ "Sebastian Siemiatkowski". Forbes. Archived from the original on 26 November 2022. Retrieved 26 November 2022.
  11. ^ Stothard, Michael (13 July 2021). "Klarna: everything you need to know before you use it". Sifted EU. Archived from the original on 27 September 2021. Retrieved 27 September 2021.
  12. ^ Graham, August (2 February 2021). "Klarna – the pay later giant and Europe's biggest private fintech". Yahoo Finance. Archived from the original on 27 September 2021. Retrieved 27 September 2021.
  13. ^ Montén, Ellen (23 May 2016). "The story of how a complete coincidence led to the creation of the $2 billion fintech startup Klarna". Business Insider Nordic. Archived from the original on 20 December 2016. Retrieved 18 December 2016.
  14. ^ "Interview: from Burger King to boardroom, how Klarna became". Whiteboard. Archived from the original on 12 March 2018. Retrieved 18 December 2016.
  15. ^ Bernet, Magnus (18 March 2016). "Börs: Öresund och Creades säljer samtliga aktier i Klarna". Analysguiden (in Swedish). Aktiespararna. SIX News. Archived from the original on 27 September 2021. Retrieved 27 September 2021.
  16. ^ "How Klarna got investment from Sequoia Capital". Business Insider. Archived from the original on 8 April 2016. Retrieved 8 April 2016.
  17. ^ "Klarna acquires Analyzd to tie social to finance and payments". TechCrunch. AOL. 4 May 2011. Archived from the original on 15 April 2016. Retrieved 8 April 2016.
  18. ^ "Start-Up 100: A-Z". Telegraph.co.uk. 5 April 2011. Archived from the original on 28 February 2021. Retrieved 8 April 2016.
  19. ^ Schonfeld, Erick. "European Payment Service Klarna Raises A Whopping $155 Million From DST And General Atlantic". TechCrunch. Archived from the original on 18 January 2021. Retrieved 16 December 2015.
  20. ^ "Klarna Closes $155 Million Financing to Accelerate Global Expansion". General Atlantic website. Archived from the original on 22 December 2015. Retrieved 16 December 2015.
  21. ^ Ohr, Thomas (18 December 2013). "Klarna acquires German SOFORT AG for $150 million /". EU-Startups. Archived from the original on 27 September 2021. Retrieved 27 September 2021.
  22. ^ "Fast-growing Klarna expanding its role easing e-commerce". The Columbus Dispatch. Archived from the original on 22 January 2018. Retrieved 8 April 2016.
  23. ^ "Inc. Founders Project with Alexa von Tobel: Why Friction is Underestimated with Sebastian Siemiatkowski of Klarna on Apple Podcasts". Apple Podcasts. Archived from the original on 20 January 2023. Retrieved 20 January 2023.
  24. ^ "Klarna annual report 2019" (PDF). Klarna. March 2020. Archived (PDF) from the original on 23 January 2021. Retrieved 12 May 2020.
  25. ^ "Swedish payments firm Klarna shifts focus to U.S. as revenues swell". Reuters. 24 February 2016. Archived from the original on 7 July 2017. Retrieved 2 July 2017.
  26. ^ Olsson Jeffery, Miriam (24 April 2015). "Damberg om Sveriges fem enhörningar" [Damberg about Sweden's five unicorns]. Svenska Dagbladet. Archived from the original on 24 April 2016. Retrieved 15 April 2016.
  27. ^ Walker, Peter (14 September 2018). "Klarna buys Close Brothers Retail Finance". Retail Systems. Archived from the original on 19 March 2024. Retrieved 19 March 2024.
  28. ^ "Klarna grows again, acquiring close brothers retail finance to strengthen position in UK market | The Payments Association". The Payments Association. 2 October 2018. Archived from the original on 19 March 2024. Retrieved 19 March 2024.
  29. ^ "Klarna raises $460 million, looks to expand its payments presence in the US". TechCrunch. 6 August 2019. Archived from the original on 6 August 2019. Retrieved 6 August 2019.
  30. ^ Milne, Richard (6 August 2019). "Klarna becomes most valuable EU fintech with $5.5bn valuation". Financial Times. Financial Times. Archived from the original on 25 February 2021. Retrieved 7 August 2019.
  31. ^ "Nuji | Designer Fashion & Homeware from the best online stores". Nuji. Archived from the original on 2 August 2020. Retrieved 13 July 2020.
  32. ^ Browne, Ryan (4 March 2020). "Chinese payments giant Ant Financial buys a stake in Swedish fintech start-up Klarna". CNBC. Archived from the original on 17 December 2020. Retrieved 11 December 2020.
  33. ^ Milne, Richard (10 June 2021). "SoftBank investment helps Klarna to $45.6bn valuation". Financial Times. Archived from the original on 10 June 2021. Retrieved 11 June 2021.
  34. ^ Hall, Christine (23 November 2021). "Klarna offers 'Pay Now' option in US, Klarna Card coming soon". TechCrunch. Archived from the original on 26 November 2021. Retrieved 26 November 2021.
  35. ^ "The Klarna card is here: we're launching a no interest, no late fees physical card in the UK". Klarna. Archived from the original on 28 January 2022. Retrieved 28 January 2022.
  36. ^ "Klarna: 'buy now, pay later' firm to launch card in the UK". The Guardian. 26 January 2022. Archived from the original on 31 January 2022. Retrieved 31 January 2022.
  37. ^ Cameron, Isabel (4 April 2022). "Klarna completes acquisition of PriceRunner –". Latest Retail Technology News From Across The Globe – Charged. Archived from the original on 7 July 2023. Retrieved 4 April 2022.
  38. ^ "Company announcement from CEO Sebastian – Klarna Sverige". Archived from the original on 23 May 2022. Retrieved 23 May 2022.
  39. ^ "Klarna lays off 10% of its workforce". TechCrunch. 23 May 2022. Archived from the original on 24 May 2022. Retrieved 31 May 2022.
  40. ^ PYMNTS (1 June 2022). "Klarna Intros Physical Visa Card With Marqeta". www.pymnts.com. Archived from the original on 1 June 2022. Retrieved 2 June 2022.
  41. ^ "Klarna to make second round of job cuts". www.sifted.eu. 22 September 2022. Archived from the original on 28 October 2022. Retrieved 28 October 2022.
  42. ^ Pina Alzugaray, Monica (20 September 2022). "Klarna lanza sus depositos y cuenta de ahorro en Raisin.es". Raisin (in Spanish). Archived from the original on 21 February 2024. Retrieved 21 February 2024.
  43. ^ Forristal, Lauren (19 October 2022). "Klarna launches new creator features and shoppable video". TechCrunch. Archived from the original on 19 October 2022. Retrieved 19 October 2022.
  44. ^ Son, Hugh (24 January 2024). "Klarna to debut $7.99 monthly plan as buy now, pay later firm seeks new revenue sources ahead of IPO". CNBC. Archived from the original on 24 January 2024. Retrieved 24 January 2024.
  45. ^ Woodward, Kevin. "Eye on BNPL: Klarna Debuts a Subscription Service; PublicSquare Enlists Credova". Digital Transactions. Archived from the original on 24 January 2024. Retrieved 24 January 2024.
  46. ^ Forristal, Lauren (24 January 2024). "Klarna introduces $7.99 'Klarna Plus' subscription plan as it approaches an IPO". TechCrunch. Archived from the original on 24 January 2024. Retrieved 24 January 2024.
  47. ^ Karlsson, Johannes (27 February 2024). "Klarnas vd: AI-assistent ska lyfta vinsten med 400 mkr i år". Dagens industri (in Swedish). Archived from the original on 27 February 2024. Retrieved 27 February 2024.
  48. ^ Zara, Christopher (27 February 2024). "Klarna says its OpenAI virtual assistant does the work of 700 humans". Fast Company. Archived from the original on 27 February 2024. Retrieved 27 February 2024.
  49. ^ "Swedish Fintech Klarna Files for Widely Expected IPO in US". www.msn.com. Retrieved 13 November 2024.
  50. ^ "Klarna: 'buy now, pay later' system that is seducing millennials". The Guardian. 17 November 2018. Archived from the original on 2 February 2021. Retrieved 2 February 2021.
  51. ^ "Buy now, pay later firms such as Klarna face stricter controls". BBC News. 2 February 2021. Archived from the original on 2 February 2021. Retrieved 2 February 2021.
  52. ^ Carolina Neurath (1 April 2014). "Large number of complaints regarding invoices from Klarna". Svenska Dagbladet. Archived from the original on 1 May 2015. Retrieved 20 November 2021.
  53. ^ Niklas Adalberth of Klarna at Arctic15. ArcticStartup. 25 February 2013. 31 minutes in. Archived from the original on 20 November 2021. Retrieved 20 November 2021.
  54. ^ "Amtsgericht Bremerhaven vom 11. Januar 2022, 51 C 1062/21". OpenJur 2022,2608 (in German). Archived from the original on 7 March 2023. Retrieved 13 February 2022.
  55. ^ "Gerichtsurteil: Sind Mahngebühren bei Klarna zulässig?". WZ Waltroper Zeitung (in German). Archived from the original on 13 February 2022. Retrieved 13 February 2022.
  56. ^ "Dritte konnten Telefonnummern von Klarna-Kunden abrufen". Der Spiegel (in German). 11 February 2020. Archived from the original on 22 February 2022. Retrieved 22 February 2022.
  57. ^ "Privacy watchdog to probe Klarna after email backlash". BBC News. 13 October 2020. Archived from the original on 20 February 2022. Retrieved 20 February 2022.
  58. ^ "Klarna mobile app bug let users log into other customers' accounts". BleepingComputer. Archived from the original on 28 May 2021. Retrieved 1 June 2021.
  59. ^ "Klarna comment: statement on app bug". Klarna UK. 27 May 2021. Archived from the original on 24 September 2021. Retrieved 27 September 2021.
  60. ^ "Klarna: 'I got a £30 bill – but I didn't buy anything'". BBC News. 29 January 2021. Archived from the original on 20 February 2022. Retrieved 20 February 2022.
  61. ^ a b "'Criminals love buy now, pay later': How fraudsters exploit popular interest-free payment plans". CNBC. 18 November 2021. Archived from the original on 22 February 2022. Retrieved 22 February 2022.
  62. ^ "Maksufirma Klarnan kautta pystyy tilaamaan tavaraa toisen nimiin – MOT:n testi osoittaa, kuinka pahasti ruotsalaisyhtiön tietoturva vuotaa". Yle.fi (in Finnish). 13 July 2021. Archived from the original on 20 February 2022. Retrieved 20 February 2022.
  63. ^ "Klarna comment: SDPA's conclusion of their audit". 29 March 2022. Archived from the original on 19 May 2022. Retrieved 12 May 2022.
  64. ^ "Administrative fine against Klarna after investigation". 31 March 2022. Archived from the original on 25 May 2022. Retrieved 13 May 2022.
  65. ^ Makortoff, Kalyeena (1 June 2022). "Klarna criticised for chaotic handling of job cuts". The Guardian. Archived from the original on 22 May 2023. Retrieved 23 May 2023.
  66. ^ Kronö, Simon (26 April 2024). "Fräcka bluffsajterna tvingar Klarna att krypa till korset". Dagens PS (in Swedish). Archived from the original on 8 May 2024. Retrieved 8 May 2024. En majoritet av de vilseledande nätbutikerna har Klarna som betalalternativ.
  67. ^ Kronö, Simon (7 May 2024). "Så rundar bluffsajterna Klarna – och lurar nya kunder". Dagens PS (in Swedish). Archived from the original on 8 May 2024. Retrieved 8 May 2024. Konsumentverket hängde för två veckor sedan ut tio bluffsajter som säger sig sälja varor från egna lager i Sverige, men som egentligen skickar dem från utlandet. En majoritet av de namngivna nätbutikerna har Klarna som betalalternativ.
  68. ^ "Så lätt kapas din identitet på Klarna". Expressen (in Swedish). 8 July 2019. Archived from the original on 8 May 2024. Retrieved 8 May 2024.
  69. ^ "Lars, 87, lurades på faktura genom köp via Klarna". DN.se (in Swedish). 15 May 2019. Archived from the original on 15 May 2019. Retrieved 8 May 2024.
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