Klarna Expands Financial Services With EMI Authorization

The Swedish FinTech announced Wednesday (July 30) that its British subsidiary Klarna Financial Services UK (KFSUK) has been authorized by the U.K.’s Financial Conduct Authority (FCA) as an electronic money institution (EMI).

This authorization, the company said in a news release, sets the stage for the launch of Klarna balance and Klarna Cashback in the U.K. later this year.

“This authorization marks Klarna’s next big step in the UK—moving beyond flexible payments into everyday financial management,” Abby Vickers, head of Klarna Financial Services U.K., said in the release.

“While traditional banks are still playing catch-up, Klarna is giving consumers a smarter way to spend—and now, to manage their finances too. This is what modern money management looks like: manage, spend, and get rewarded—without the hassle.”

According to the release, Klarna balance — already available in the U.S. and parts of Europe — lets British users hold and manage funds in a Klarna account. Customers can top up this account from their debit card, use it to shop with Klarna, receive direct refunds and earn cash back when they shop.

Klarna Cashback, meanwhile, gives consumers up to 10% back on purchases made with the Klarna app, letting them spend those funds anywhere Klarna is accepted.

The new authorization comes as Klarna has been stepping up its digital banking efforts, branching out from the buy now, pay later (BNPL) offerings that were its core business.

The Swedish company recently joined forces with Visa to launch a debit card in the U.S., letting customers pay for purchases up front, instead of in installments.

Klarna has also announced plans to enter the mobile business, following in the steps of neobanks like Nubank and Revolut. And after introducing savings and deposits products in Germany, the company is now doing the same in the U.S., its largest market.

PYMNTS wrote earlier this year about efforts by Klarna and other companies in its sphere to stretch beyond their “pay in 4” roots.

That report also cited research from PYMNTS Intelligence which found that 46% of Gen Z and 47% of millennials had used BNPL within the past year. Upwards of 40% of consumers said that if BNPL options were not offered, they would not make a purchase.

“The initial appeal of BNPL, a decade ago, may have resided with small-dollar transactions and lower-income consumers; now 6 in 10 of all U.S. consumers who use the payment method for convenience make at least $100,000 a year,” the report said.