- Klarna, which provides buy now, pay later services to consumers, dubbed the U.S. as its largest market after it sold more services in the country last year than in any place else.
- The Stockholm-based company’s gross merchandise volume jumped 71% in the U.S. last year compared to 2021, the company said in a press release Wednesday. The U.S. business last year surpassed the former top market of Germany, which is now Klarna’s No. 2 market.
- A spokesperson for Klarna declined to provide the GMV figures underlying the market share ranking, but the company will provide more details about its business when it releases financial results next week.
Klarna touted its growing foothold in the U.S. as the competition for BNPL customers becomes more intense. That market has been in recent years the largest consumer market by consumer spending, according to the research firm Euromonitor International.
Klarna’s U.S. customer count jumped 36% to 34 million as of the end of last year, up from 25 million at the end of 2021. The company counts customers as users of any of its products.
Still, the company has plenty of competition also gunning to attract more U.S. customers. They include San Francisco-based Affirm, the largest independent BNPL provider in the U.S. as well as rival Afterpay, backed by the big San Francisco-based fintech Block.
In addition, Sydney-based Zip seeks to expand in the U.S., as does Minneapolis-based Sezzle. Those two companies planned to combine their strengths last year in a merger, but the deal fell apart as the economy soured.
For all of the BNPL providers, the increasingly strained economic environment, with higher interest rates and rising inflation, could present challenges for boosting customer demand. Nonetheless, it could give a lift too, as consumers seek more financing for purchases.
Most BNPL companies, including Klarna, have posted losses in recent years and are under pressure from investors to show profits. While the companies got a boost from a surge of e-commerce spending during the early years of the COVID-19 pandemic, that mania has dropped off as the spread of the deadly virus has ebbed. Klarna will provide more financial details when it reports results for 2022 on Feb. 28.
To improve their financial performance, many BNPL providers are offering services beyond their traditional installment financing. For instance, Klarna has introduced U.S. virtual cards in partnership with network behemoth Visa and it also pointed today to increased marketing services for merchants.
To gain attention, Klarna is hiring high-profile marketing muscle. Recently, it signed on 2000s socialite Paris Hilton to boost its marketing effort and it has also snagged rap star A$AP Rocky as an investor.
Meanwhile, BNPL providers will have to contend with increasing regulatory scrutiny as they seek to grow in the U.S. market as the Consumer Financial Protection Bureau mulls more rules for the industry.