Klarna Launches Savings Accounts and Cashback Rewards in U.S.

Klarna, the Swedish buy now, pay later (BNPL) company, is introducing the option for consumers to use savings accounts for payments, refunds, and earning cash rewards from select retailers, reports BankingDive. These new features are part of Klarna's strategy to expand its global footprint and revolutionize how consumers manage their finances and make payments.

Klarna has been offering these accounts in Germany since 2021, according to Bloomberg.

Now, U.S. consumers can transfer money from their bank accounts to the Klarna app and receive refunds from retailers directly into their app account. Klarna’s BNPL service allows consumers to finance purchases with a down payment and pay the remaining balance in three installments over six weeks, with potential late fees and other charges applicable in certain cases.

This move positions Klarna to compete directly with major U.S. banks like JPMorgan Chase, Bank of America, and Wells Fargo. However, the company has not disclosed which bank might support the new Klarna accounts. “We’re working with several partners to bring this product to the U.S. market, but we’re not disclosing the names of the banks,” a Klarna spokesperson said via email.

Stockholm-based Klarna has already challenged U.S. banks by reintroducing its branded credit card in April, in collaboration with WebBank and Visa. This followed a previous, discontinued credit card program in 2022. As Klarna expands its banking offerings, it faces competition from other BNPL providers like San Francisco-based Affirm.

The BNPL industry is under increasing scrutiny from regulators who want to protect consumers from new forms of debt. In May, the Consumer Financial Protection Bureau proposed an interpretive rule to treat BNPL loans similarly to credit card financing. Funds held in Klarna accounts will not be covered by FDIC insurance, unlike those held in U.S. banks. Klarna expects the accounts will primarily be used by consumers to receive cashback and process refunds faster, without large balances being held in them.

“Today’s launches are a significant advancement, allowing consumers to earn while they shop and manage their finances within a Klarna account,” said Klarna’s CEO, Sebastian Siemiatkowski. When asked about the company’s motivation to enter the banking sector, a spokesperson said: “We aim to assist consumers with everyday spending in areas where traditional banks may not always have their customers’ best interests in mind.”

Through the Klarna app, customers can also pay for goods and services immediately, with about one-third choosing to do so, according to the spokesperson.