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Klarna: EU’s Top FinTech Startup

Have you ever had one of those days, where you just sit on your couch in your pyjamas eating pizza leftovers whilst scrolling through shopping sites and looking at expensive stuff?

It goes something like: Scroll, tap “add to basket”, look at the total, have a mini-heart attack because you must sell your house, car and probably your soul in order to afford it, then close the website altogether until you start over next week.

Yeah… been there, done that!

Now, what if we told you, you can actually buy stuff and pay in installments with no fees? We bet you didn’t see that one coming.

Say hello to Klarna.


Once upon a time, a 15-year old teenager by the name of Sebastian Siemiatkowski worked at a Burger King restaurant in Uppsala central Sweden.

Ever since he was a kid, he had aspirations of becoming a successful businessman.

He then met Niklas Adalberth with whom he became really good friends, sharing both their business ideas and dreams.

“There was something about becoming financially successful that intrigued me. As a kid, I used to spend a lot of time coming up with business ideas, and I read a lot of business books about successful entrepreneurs like Richard Branson” he said.    

A few years later, while studying for a business and economics degree at Stockholm School of Economics, Siemiatkowski met and became friends with Victor Jacobsson.

The three young men had a very similar goal: to conquer the business world.

They decided to take a year off from their studies and travel to different destinations by ship since they were on a tight budget. “Many days on cargo ships across the oceans gives you lots of time to think,” said Siemiatkowski.

Whilst travelling the ocean, the three pals began thinking about ideas that would simplify e-commerce for customers.

And that is how the Klarna idea was born.


Klarna was founded in 2005, and its aim was to find a way to make online shopping easier for people. In 2014, the company acquired SOFORT and the Klarna Group was formed, with Sequoia Capital, Bestseller, Permira, Visa and Atomico as its investors.

Since then, the team has been improving its business structure and technology whilst remaining devoted to its main goal – making payments for online products simple, safe and as their motto claims “smoooth”.

The philosophy is to give consumers the flexibility to pay in a way that works best for them.

As a result, Klarna gives shoppers three different payment options: “Pay now”, “Pay Later” and “Slice it”.

“Pay Now” is a straight forward way of paying, which is popular with other payment services. Many merchants, however, prefer the Klarna checkout because it reduces abandoned baskets and gives an overall better user experience to clients.

“Pay Later” is the service where things get really interesting and the company essentially creates its unique selling point. Customers have the opportunity to try the item before they actually purchase it. They then have 14 to 30 days to pay for their goods, or they simply return it back with no interest or fees.

The general manager of Klarna UK Luke Griffiths stated that Pay later is a real differentiator for retailers: those that offer the payment method have seen a 20% increase in purchase frequency and 15% increase in basket value.”

So basically, Klarna will pay for the product on the shopper’s behalf thus protecting the seller, and the shopper then pays Klarna over time with no fees added to the price. This technique also protects the buyer, thanks to Klarna’s pre-authorization process and buyer’s protection policy.

Finally, “Slice it” gives shoppers the chance to “split” the cost of their goods into equal monthly payments, making the paying process more flexible and feasible.


Collaborating with companies such as ASOS, JD Sports and Topshop the past year, it has also been reported that fashion retailer H&M invested $20 million buying less than 1% stake in the Swedish growing empire.

In a statement published on the 6th of August 2019, Klarna announced that its valuation now reached $5.5 billion after a $460 million funding.

As a result, Klarna is now one of Europe’s most valuable FinTech startups and is providing payment solutions for 60 million consumers across 130,000 merchants in 14 countries.

In the published press release it also states that “this funding will help Klarna to continue its rapid rise in the US market, where it is currently growing at an annual rate of 6 million new US consumers.”


The Klarna team’s motto was to create a “smoooth” experience in buying stuff online. And who is smooother than the one and only, Snoop Dogg?

Siemiatkowski himself stated “We were wondering who is the smoothest person alive, that was really the background of how the name Snoop Dogg popped up in our heads. When we started speaking to Snoop Dogg, he was very keen to learn more about the tech industry, fintech, all these things, so we connected very well.”

The famous rapper decided to join forces with the Swedes and create brand awareness around Klarna and its “smooothing” paying solutions. Snoop Dogg then became the face of the major campaign called “Get Smoooth”, created a series of promotional videos (you can find them on YouTube), and also became a minor shareholder in the company.

Talking about this collaboration, the rapper stated “I’ve been doing business in Europe for years with fashion brands, telecommunication companies and more. I’ve endorsed them, advised them, and now I’m looking to invest in them. I plan to keep growing the portfolio, ya dig?”

Snoop Dogg Klarna


Millennials and younger teens are more familiar with the whole “buying stuff online” culture, as they are part of the growing digital era.

Through Klarna’s campaign on YouTube, it is safe to say that the target audience here is the “future kids”.

From using a rap-icon like Snoop Dogg, together with the bright coloured graphics and styles, as well as the music selected for the video’s creation, Klarna is trying to promote a cool-youngish vibe.

The service itself could also be seen as targeting the younger generation, in order to help them buy stuff easier and with small payments if they don’t make enough money to buy stuff in “one go”.

This, however, can have a downside to it…

In order to use Klarna’s services, they only ask for an e-mail address, postcode and date of birth. After checking that the shopper hasn’t had any previous repaying problems with other retailers, instant credit is likely to be approved.

According to a BBC article, critics are starting to worry that teens and millennials will start buying things they don’t need or can’t afford and will eventually end up with a lot of “shopping” debt.

About 80% of applicants are seen to be people in their early 20’s or even teenagers, and approximately one million people have used it so far in the UK.

Although shoppers have an extra 120 days to pay their bill if they can’t do so within the first 30 days given, if they still can’t pay for their orders, the bill will be passed on to a debt collection agency and this can affect their credit rating.

Jane Tully, director of external affairs at the Money Advice Trust said that “For all customers, and particularly younger consumers, the check-out should never be a place for the hard-sell when it comes to credit.”

However, Klarna UK General manager Luke Griffiths disagrees with this statement and claims that they are not a typical traditional credit service.

“Our ‘pay later’ solution does not charge the consumer any interest, any fees, or anything associated with not paying on time. As opposed to a credit card, if you go over a period when you were intended to repay and you start incurring charges and interest this service is different because we’re working with the customer.”


To be completely honest with you, Klarna does sound pretty amazing.

It’s a new way of being able to shop for things that might not necessarily be too expensive in general, but maybe too expensive for you at that given time.

If this is the case, paying in instalments is ideal.

However, the regulation when approving applicants should be stricter or more specific in order to avoid putting jobless teens in debt.

Each individual must be financially responsible with or without Klarna because there is always a tricky way to fall into debt.

At this stage though, Klarna is growing fast and the whole project is promising, and this new FinTech giant might change the whole retail game as we’ve ever known it to be.

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