The Swedish Fintech giant Klarna, one of the oldest and largest payment firms dedicated to offering “buy now, pay later” solutions, launched in the United States seven years ago, but growth has only recently accelerated. The company has established itself in the American market with the help of celebrities such as Snoop Dogg (who briefly changed his name to Smooth Dogg), Lady Gaga, and ASAP Rocky.

Targeting big retailers rather than focusing on deals with firms like Shopify and BigCommerce, the gateways to millions of small online merchants, is at the core of Klarna’s United States growth strategy. The 17-year-old firm has raised $3.9 billion in funding, at a valuation of $46 billion, from SoftBank, Sequoia Capital, and others. Now it’s seeking to gain visibility and customers in the U.S, where it’s up against Affirm and Square with AfterPay.

David Sykes, who is head of Klarna’s North American operations, sees a land grab that Klarna is racing to win. By the end of 2022, there will not be a major retailer that’s not offering the “buy now, pay later” option, he said in our latest interview series.

Klarna has grown so fast that when the United States opened up after the pandemic in 2021, they realized that they had grown out of their new office. Even before they had actually moved in.

The key to the increase

Of the markets in which Klarna operates, Germany and the Nordics are still the largest, but the United States is rapidly catching up. During 2021, sales volume increased by more than 300 percent and more than 20 million customers used Klarna, the company stated.

“The first two years for Klarna in the USA were about getting to know the market and finding the right products,” says David Sykes, “once we found the app and the right payment solution, it exploded.”

As a key to the rapid growth, he says that they have managed to land collaborations with several of the largest sellers in the American market, including Nike, ASOS, and H&M.

David Sykes on attracting a younger generation

Above all, it is the younger American generation that has adopted Klarna, it is because they view credit differently, says David Sykes.

“More than half of the millennial generation in the United States does not have credit cards. The skepticism of the traditional banking system, together with the fact that retailers have jumped on the bandwagon so fast, is what is accelerating our progress.”

It also makes him think that Klarna will change in the next few years. He believes (of course) that “buy now, pay later” companies like Klarna will take market shares from the credit companies, but that the future may also look a little different for Klarna. “We want to be the intersection between payment, banking, and shopping where customers will place more trust in us than their regular bank.”

Pay in 4 subscription services in the US

By 2023, 75% of organizations selling direct-to-consumer will offer subscription services, reports the Subscription Trade Association. With Klarna’s US subscription offering, merchants across categories such as beauty, apparel, and fitness services can now provide added value to consumers who seek convenience, flexibility, and curated experiences.

“The subscription market has seen massive innovation in the last decade and met increased demand and popularity amongst consumers,” said David Sykes, the Head of North America Klarna. “That’s why we were thrilled last year to be able to announce Klarna’s subscription offering in the US as the first for the market. As competition intensifies, the brands that provide the best services across value, flexibility, and a customer-obsessed experience will thrive.”

“Our ambition is not to be at the checkout of as many websites as possible but to sit at the intersection of retail and banking and payments and to try to enhance all of those activities,” Mr. Sykes continues.

As for everyone else, the corona crisis has set the tone for Klarna over the past two years. Without in any way diminishing the pandemic’s seriousness and terrible effects, the crisis for Klarna’s part has meant accelerated growth, as people shop more online and to a large extent, Klarna provides their services in online shopping. That Klarna has a very bright future ahead, is clear and it will be interesting to see how they will meet their goals.