Swedish fintech Klarna booms in Europe as demand up by a quarter in the UK

Klarna’s new payment cards (Klarna)
Klarna’s new payment cards (Klarna)

Swedish fintech Klarna is booming in Europe as shoppers turn to Buy Now, Pay Later products amid inflationary pressure and high interest rates.

The firm today said gross merchandise value, a measure of the goods sold through its platform, had grown 26% in the UK and 14% across Europe in the second quarter of the year, as it amassed over 100 million European consumers and struck deals with over 470,000 merchants.

But Klarna did not say whether the increased demand would turn a profit or whether it would drive up the company’s losses. The firm continues to offer interest-free instalments on products bought using credit, despite the fact that central bank interest rates have tripled over the past year. In 2022, Klarna posted a loss of $1 billion.

Klarna CEO Sebastian Siemiatkowski said: “While other, smaller players dial back their commitment or leave the region altogether, we’re doubling down, further strengthening our position in Europe, as well as the US.”

Last year, the fintech saw its valuation plunge 85% from its 2021 peak after a fresh funding round, in signs short-term lenders were being hit by rising interest rates.

Klarna said the investment took place “during possibly the worst set of circumstances to afflict stock markets since World War II: high inflation, rising interest rates, mounting fears of a recession, the after effects of the first global pandemic since 1918, strains on commerce caused by supply chain disruptions, rising gas prices, and, especially in Europe, the dislocations caused by the war in Ukraine.”

“The company’s peers are down 80-90% vs peak valuations and consequently the adjustment in Klarna’s valuation is on par with its public peers from its $45.6bn valuation in June 2021,” the firm said.

The company completed a round of layoffs last year, and recently cut a further 250 employees in Germany and Sweden in a bid to outsource workers and cut costs, according to news website Sifted.