A New Feature for Klarna’s Services

Klarna, a leader in “buy now, pay later” offerings, has expanded its services by introducing peer-to-peer payments in 13 European countries. This move positions Klarna to become a full-service digital bank while competing with existing P2P apps.

Initially, the feature is limited to users who already have a Klarna account. However, future plans include allowing transfers to non-Klarna users and enabling cross-border payments.

Integrating into Existing Offerings

Klarna’s peer-to-peer service integrates with its existing financial products. Funds are deducted from the user’s Klarna balance only after a successful transfer, once all eligibility and security checks have been completed.

Becoming a Full-Service Digital Bank

The company already holds a full banking license in the EU but is yet to secure similar status in the U.S. Following its IPO in September 2024, Klarna launched the Klarna Card, which has gained over four million sign-ups.

Competing in an Established Market

In Europe, peer-to-peer payments are more common due to a greater acceptance of open banking. Numerous local P2P services exist, with Bizum, owned by major Spanish banks, being the dominant player in Spain.

This market poses challenges for new entrants. For instance, Meta attempted to establish its own P2P service but abandoned it after eight years without success.

Utilizing Existing User Base

“Klarna is positioning itself as more than just a BNPL provider,” noted Ben Danner, Senior Analyst at Javelin Strategy & Research. “They have launched debit cards and now offer P2P services, driving customers to use their app more frequently.”

Despite the competition, Klarna’s existing user base of millions could provide a competitive edge in this crowded market.