Klarna files for US bank charter after $91 billion in credit

Klarna's application for a US bank charter marks the buy now, pay later pioneer's push to bring its lending operations in-house, reducing reliance on partner banks after extending $91.3 billion in American credit.

"Banking is built on trust," Sebastian Siemiatkowski, co-founder and chief executive officer of Klarna, said. "We've seen firsthand the appetite for a fairer, more transparent approach in the US, and our own banking license is the natural next step."

The application, filed July 6 with the Utah Department of Financial Institutions and the Federal Deposit Insurance Corp., proposes Klarna Bank USA as a Utah-chartered industrial bank with its own independent board, governance and internal controls. Gary Harding, former chairman and chief executive officer of Milestone Bank, has been selected to serve as president and chief executive officer of the proposed subsidiary.

If approved, the charter would let Klarna operate its own American banking subsidiary rather than relying on third-party partners, potentially improving margins and operational control. The filing follows conditional approval earlier this year for fintech Mercury to establish its own bank, signaling a broader industry shift toward vertical integration among digital lenders.

Klarna has operated as a licensed bank in Europe since 2017 and serves 30 million US users annually. Since 2019, the company says its credit products have saved Americans more than $5.1 billion in interest compared with revolving credit card debt. Globally, Klarna processes 3.4 million transactions per day across 119 million active users, and hundreds of thousands of merchants rely on its network.

The charter application comes as Klarna, listed on the New York Stock Exchange under the ticker KLAR, seeks to differentiate itself from competitors including Affirm Holdings Inc. and Block Inc.'s Afterpay. Unlike those rivals, Klarna would combine a banking license with its payments network, offering deposit, savings and lending products under one roof — a structure more akin to a digital bank than a pure BNPL provider.

For consumers, the proposed bank would offer products that are "transparent, safe, and free of hidden fees," according to the company. Klarna said it will work closely with regulators throughout the application process, which requires approval from both state and federal authorities.

The charter represents a strategic bet that vertical integration will improve Klarna's unit economics by cutting out intermediary bank fees. If approved, Klarna would join a small but growing cohort of fintechs that have chosen to own their banking infrastructure rather than rent it. The outcome could influence whether other BNPL players and digital lenders pursue similar applications, potentially reshaping the competitive dynamics of the $1.5 trillion US consumer credit market.

This article is for informational purposes only and does not constitute investment advice.