Klarna takes on banks with debit card because it diversifies past purchase now, pay later

Swedish fintech Klarna — basically identified for its fashionable “buy now, pay later” products and services — is launching its personal Visa debit card, because it seems to be to diversify its trade past momentary credit score merchandise.

The corporate on Tuesday introduced that it is piloting the product, dubbed Klarna Card, with some consumers within the U.S. forward of a deliberate countrywide rollout. Klarna Card will release in Europe later this yr, the company added.

The transfer highlights an ongoing effort from Klarna forward of a extremely expected preliminary public providing to shift its symbol clear of the poster kid of the purchase now, pay later (BNPL) development and be seen as extra of an all-encompassing banking participant. BNPL merchandise are interest-free loans that let folks to repay the total value of an merchandise over a chain of per 30 days installments.

“We want Americans to start to associate us with not only buy now, pay later, but [with] the PayPal wallet type of experience that we have, and also the neobank offering that we offer,” Klarna CEO Sebastian Siemiatkowski informed CNBC’s “The Exchange” ultimate month. “We are basically a neobank to a large degree, but people associate us still strongly with buy now, pay later.”

Klarna’s newly introduced card comes with an account that may hang Federal Insurance Deposit Corporation (FDIC)-insured deposits and facilitate withdrawals — very similar to checking accounts presented via mainstream banks.

Notably, Klarna Card is powered via Visa Flexible Credential, a provider from the American card community that shall we customers get admission to a couple of investment assets — like debit, credit score and BNPL — from a unmarried cost card. It’s a debit card via default, however customers too can toggle to considered one of Klarna’s “pay later” merchandise, together with “Pay in 4” and “Pay in 30 Days.”

Klarna is pushing deeper right into a fiercely aggressive shopper banking marketplace. The U.S. banking business is ruled via heavyweights akin to JPMorgan Chase & Co and Bank of America, whilst fintech challengers like Chime have additionally attracted thousands and thousands of shoppers.

While Klarna has a complete banking license within the European Union, it does no longer have its personal U.S. financial institution license. However, the company says it is ready to supply FDIC-insured accounts thru a partnership with WebBank, a small monetary establishment primarily based in Salt Lake City, Utah.

WATCH: CNBC’s complete interview with Klarna CEO Sebastian Siemiatkowski