Klarna Takes on UK Banks With Debit Card and Digital Wallet Launch
Klarna, the Swedish fintech best known for its purchase now, pay later (BNPL) model, is taking direct aim at Britain’s retail banks with the launch of a debit card and a digital wallet, expanding its push beyond instalment payments into mainstream financial services.
The new offerings — Klarna Balance and the Klarna Card — is said to make the app a daily spending hub, not just a checkout option. The to store funds, move money in and out, and earn cashback on certain purchases made through Klarna. The card, backed by Visa, will give users direct access to those and is expected to roll out to UK consumers following launches in the U.S. and across Europe.
“Traditional banks have taken the trust out of banking,” said David Sandstrom, Klarna’s chief marketing officer. “We’re here to change that.”
The UK move follows Klarna’s authorisation from the Financial Conduct Authority (FCA) in July to offer e-money services, effectively granting it the identical and Monzo use to operate customer wallets and cards. The authorisation clears the regulatory hurdle that had previously limited Klarna’s ambitions in the UK beyond BNPL lending.
The expansion reflects Klarna’s long-term strategy to become an all-in-one spending and savings app, allowing customers to manage funds, shop, and pay in instalments from a single platform. By moving into debit cards and wallets, Klarna is stepping squarely into territory dominated by traditional banks — daily consumer payments and deposits — a market that provides a steady stream of interchange and customer engagement.
The new products arrive as the UK prepares to bring BNPL services under tighter FCA oversight in 2026. The rules, part of a broader consumer credit overhaul, will require affordability checks and clearer disclosure of repayment risks. Klarna’s new e-money licence, meanwhile, gives it a regulated footing ahead of those changes.
Founded in Stockholm in 2005, Klarna made its name offering interest-free instalment payments for online shopping, a model that exploded in popularity during the pandemic. Its valuation soared to $46 billion in 2021, before collapsing to $6.7 billion in a 2022 down round amid rising losses and investor pullback from growth fintechs. Since then, the company has worked to rebuild profitability through tighter credit controls, automation, and expansion into fee-based products like advertising and cards.
Klarna returned to profitability in 2024, reporting annual revenues above $2.8 billion and its first profit in five years. Yet the company’s first-half 2025 results showed renewed pressure from credit losses, underlining its reliance on lending income and the need for more stable, transaction-based revenues — something debit cards and wallets could deliver.
The Klarna Card already processes roughly one in ten Klarna transactions across Europe, according to company figures, with total deposit balances topping $14 billion across its licensed markets by mid-2025. In the UK, Klarna is betting that blending instant cashback, flexible payments, and a sleek digital interface will attract consumers away from incumbent .
Meanwhile, the partnership extends Visa’s reach into Klarna’s large mobile user base, keeping card volumes on its rails even as fintechs introduce new payment flows.
Klarna’s challenge will be to balance regulatory compliance and risk management with the frictionless experience that made its BNPL product so popular. The UK’s new Deferred Payment Credit rules will likely force greater scrutiny of any card-linked instalment features, and Klarna’s rivals — from Revolut to Monzo — already offer integrated cards, wallets, and savings pots under the identical app model.
Still, Klarna’s track record of reinventing its business suggests it won’t shy away from the competition. By turning its checkout network into a gateway for banking-style services, the company is betting that the identical brand that reshaped online shopping can convince Britons to rethink everyday spending too.
