Klarna Launches Debit Card as IPO Delayed

Klarna, the Swedish buy now, pay later (BNPL) giant, recently unveiled a pilot program for its Klarna Card in the United States, a debit card poised to disrupt traditional banking models by offering consumers the flexibility of immediate payment or deferred payment options.

This move coincides with a strategic delay in Klarna's planned U.S. initial public offering (IPO), a decision driven by economic uncertainties and the potential impact of newly imposed tariffs. These developments paint a picture of a company adapting to market headwinds while aggressively pursuing growth and market share.

The Klarna Card, powered by Visa and issued by WebBank, represents a significant evolution of Klarna's core BNPL service. Unlike traditional credit cards that often lead to accumulating debt and interest charges, the Klarna Card allows users to pay immediately or leverage Klarna's signature pay-later options at over 150 million Visa-accepting merchants worldwide. This dual functionality, currently being tested in the U.S., aims to capture a broader segment of consumers, including those wary of traditional credit products. The anticipated rollout in the U.S. and Europe later this year underscores Klarna's global ambitions and its desire to become a comprehensive financial services provider.

However, Klarna's path to market dominance is not without its challenges. The company's decision to postpone its U.S. IPO, initially filed in March 2025, reflects a cautious approach to market volatility. Economic uncertainties, compounded by potential tariff impacts, have prompted Klarna to reassess its public debut, prioritizing long-term stability over immediate market capitalization. Despite the delay, the company remains adaptable, closely monitoring economic conditions and preparing for a potential IPO when the market environment becomes more favorable.

Klarna's recent financial performance offers a mixed bag of results. In Q1 2025, the company reported a 15% year-over-year revenue increase, reaching $701 million, and achieved an adjusted profit of $3 million, a significant turnaround from the $2 million loss in the same period last year. This growth was largely fueled by strong performance in its U.S. operations, with revenue surging by 33%, bolstered by partnerships with major retailers like Walmart, DoorDash, and eBay.

The exclusive partnership with Walmart, making Klarna the sole provider of BNPL loans for the retail giant, is a major coup, expected to be fully integrated across all Walmart channels by the holiday season. Similarly, the integration with DoorDash, offering BNPL options for food deliveries, expands Klarna's reach into new consumer segments.

Despite these successes, Klarna faces ongoing scrutiny regarding its business model and its impact on consumer debt. The BNPL sector has come under increasing regulatory pressure, with concerns raised about the potential for consumers to overextend themselves. Klarna's efforts to mitigate these concerns, such as the introduction of the Klarna Card and its focus on responsible lending practices, are crucial for maintaining consumer trust and navigating the evolving regulatory landscape. Furthermore, the company has implemented significant workforce reductions, leveraging artificial intelligence to drive operational efficiency. While these cost-cutting measures are aimed at achieving sustainable, profitable growth, they also reflect the challenges of scaling a rapidly growing fintech company.

Klarna's valuation has experienced dramatic swings, peaking at $45.6 billion in June 2021 before plummeting to $6.7 billion in mid-2022. Recent private market activity suggests a valuation of $12–$15 billion as of early 2025, reflecting a recovery in investor sentiment. However, the absence of a public stock price and trading data makes it difficult to assess Klarna's true market value. Investors and market watchers will need to wait until the IPO resumes to gain a clearer picture of the company's financial performance and stock market potential.