What is Klarna and why are shoppers choosing it at checkout?

Buy Now, Pay Later (BNPL) isn’t a passing phase. It’s a shift in how people shop, budget, and make financial decisions. At the centre of this movement is Klarna, a Swedish payments company that’s become a household name across Europe and the US. But what is Klarna, how does it work, and what does it mean for your business?

Let’s unpack why shoppers are choosing Klarna and what you should know before offering it at checkout.

Understanding Klarna and the rise of BNPL

Klarna’s model and mission

Founded in Stockholm in 2005, Klarna aimed to make online shopping safer and smoother. Two decades later, it's become one of the most recognisable BNPL providers globally, with over 180 million active users and 600,000 merchant partners as of 2025 according to CoinLaw.

What is BNPL?

BNPL allows consumers to split purchases into smaller instalments. Klarna’s model makes this easy with options like:

• Pay in 4: Four interest-free payments, typically every two weeks
• Pay in 30: Delayed payment, with no interest
• Financing: Monthly payments over 6–36 months, with interest where applicable

This flexibility has made BNPL attractive to shoppers who prefer predictability or want to avoid traditional credit.

How does Klarna work for consumers and merchants?

For shoppers: Klarna’s checkout process is friction-light. At participating retailers, users can select Klarna, undergo a soft credit check for eligibility, and complete their purchase in seconds. Their mobile app helps track payments, manage returns, and discover deals all in one place.

For merchants: Klarna handles risk and upfront payments. Merchants are paid in full immediately while Klarna collects from the buyer. Integration is available via APIs, plug-ins, or payment orchestration platforms. Klarna also offers customer insights, A/B testing tools, and targeted marketing services.

Online or in-store: Klarna supports both, making it attractive to omnichannel retailers.

Klarna vs traditional credit cards and financing

Consumers aren’t just choosing Klarna because it’s new. They’re choosing it because it feels different. There’s no long credit application, no interest on short-term plans, and no hidden fees. Klarna tells them what they’ll pay and when. That simplicity, paired with a mobile-first experience and soft credit checks, makes it far more appealing than traditional cards for many. Especially for Millennials and Gen Z, it’s about flexibility and control without the commitment or the APR.

Klarna simplifies credit for the consumer while reducing friction at checkout. For merchants, the result is often higher average order value (AOV) and conversion rates.

Klarna vs other BNPL companies

BNPL is no longer a niche offering. It’s a competitive space, and merchants now have a range of providers to choose from including Pagaleve, Billease, Afterpay and Affirm. But not all BNPL platforms offer the same reach, product depth, or user experience. Klarna stands out with its combination of global footprint, flexible payment options, and a feature-rich app that keeps shoppers engaged well beyond checkout.

Klarna leads the category globally in user adoption and transaction volume, processing over 2 million transactions daily.

The pros and cons of using Klarna

Klarna for merchants: opportunity and trade-offs

BNPL isn't just a win for consumers. For merchants, it opens up a new way to convert intent into purchase, particularly among younger shoppers and mobile-first buyers. Klarna has positioned itself as more than a payment method. It’s also a marketing engine, a conversion booster, and a partner in reaching high-value, digitally native audiences.

Why merchants adopt Klarna:

• 27% boost in revenue post-Klarna integration and a 64% drop in cart abandonment according to Coinlaw.
• Access to Gen Z and Millennial segments that prefer non-traditional credit

What to watch for:

• Klarna charges a merchant discount rate (MDR) per transaction
• Refunds and disputes are handled through Klarna’s systems, not your own
• FX fees may apply on cross-border transactions

Merchants trade some margin for wider reach, faster checkout flows, and reduced cart friction. The payoff is often higher order values, access to new customer segments, and a smoother post-purchase experience. Klarna's ability to combine payments with marketing tools and shopper insights can also support broader commercial goals.

Klarna’s global expansion and adoption trends

Klarna serves over 45 countries. It currently holds the top position in global BNPL checkout share, accounting for 71.9% of usage worldwide.

In the US, Klarna's growth has been striking. Its user base expanded from 14.1 million in 2020 to 47.2 million in 2025.

The company’s loyalty programme is also scaling rapidly. Klarna’s Rewards Club surpassed 42 million members in 2025.

Klarna is evolving beyond payments. With real-time returns processing and app-based discovery tools, it’s increasingly becoming a full-service shopping environment.

Final thought

Klarna has reshaped how people pay. For merchants, the question isn’t whether Klarna is popular—it’s whether it fits your commercial model. Understanding the trade-offs can help you make better decisions at checkout.

Antom’s unified platform supports a range of BNPL options alongside 300+ local payment methods through one integration. Let’s talk.