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Klarna’s UK division has secured an electronic money institution licence from the Financial Conduct Authority (FCA), the firm said in a statement on Wednesday.
The Swedish fintech, which until now has focused on buy now, pay later services, will now be able to provide UK-based customers with debit cards and Klarna accounts.
Customers will be able to save and manage money in their accounts, top up their debit cards, shop and receive funds, and earn up to 10% cashback when they make purchases.
“This authorisation marks Klarna’s next big step in the UK — moving beyond flexible payments into everyday financial management,” said Abby Vickers, head of Klarna Financial Services UK.
“While traditional banks are still playing catch-up, Klarna is giving consumers a smarter way to spend — and now, to manage their finances too.”
Vickers added that the licence “lays the foundation for future product expansion, strengthening Klarna’s ambition to disrupt traditional retail banking as it becomes a true everyday spending and saving partner for consumers”.
The move sets Klarna up to compete with the likes of popular digital banks such as Revolut and Monzo.
Following Brexit, Klarna Bank AB, a fully licensed Swedish bank, continued to provide regulated services in the UK under the FCA’s Temporary Permissions Regime (TPR). In 2023, the fintech then established a new, UK-based entity to provide all consumer-facing services in the UK.
Klarna is currently preparing a New York IPO, its second attempt to list after its first launch was delayed by market turmoil linked to President Trump’s trade war.
The shift away from its buy now, pay later focus has intensified since the postponement.
Klarna is seeking to boost investor sentiment after recording a loss of $99mn (€85.7mn) in the first quarter of 2025, significantly more than the $47mn (€40.7mn) loss reported a year earlier.
Customer credit losses also rose by 17% year-on-year. This means that more customers failed to repay Klarna what they owed, raising doubts about the sustainability of the firm’s business model.
The Swedish fintech hit a peak valuation of around $46bn (€39.8bn) in 2021 after a funding round led by Japan’s SoftBank. The company then lost around 85% of its valuation in 2022 as it struggled with a period of high interest rates, prompting major job cuts.
The fintech has held a banking licence in Sweden since 2017, and CEO Sebastian Siemiatkowski has previously said the company is considering a US banking licence.
