Buy Now Pay Later: Klarna Grows Pay-in-4 With US$26bn Deal
US-based investment firm Nelnet will purchase up to US$26bn of global Buy Now, Pay Later provider Klarna’s US Pay-in-4 loans.
Klarna can now sell short-term, newly originated interest-free Pay-in-4 receivables to Nelnet on a continual basis.
Chief Investment Officer at Nelnet, Judd Deppisch, says: “Nelnet is thrilled to work with Klarna on this important transaction and support their continued success.
“This strategic partnership leverages our expertise and financial strength to invest in attractive cash-flowing assets while supporting Klarna’s valuable offering to U.S. consumers, with the support of our lending partners.”
The structure of the forward flow agreement enables balance sheet flexibility for Klarna, as it offers predictable off-balance sheet funding.
The agreement follows news from earlier this year when Klarna recorded US$136m in customer credit losses after US customers were failing to repay their loans, sparking discussion in the US about how Americans approach BNPL services.
A recent survey by LendingTree reported that almost one in four BNPL users had three or more active loans at a time.
Inflation has pushed the need for BNPL services in the US, with 25% of respondents needing to use BNPL services for groceries, which is up from 14% last year.
Klarna’s reported loss from consumers failing to repay their loans posed a temporary restriction for Klarna’s continued growth strategy, after partnerships to expand its BNPL services were announced with Doordash, Stripe and JPMorgan.
CFO at Klarna Niclas Neglén says: “This is a landmark transaction for Klarna in the US. Our partnership with Nelnet allows us to scale a core product responsibly, while continuing to deliver smooth, interest-free payment experiences to millions of consumers.”
With the additional support provided by the funding, Klarna can continue to structure and execute large-scale capital markets transitions.
Klarna’s feedback model
Klarna recently leveraged advanced artificial intelligence (AI) to assist in taking on consumer feedback.
The BNPL giant uses an AI-clone of its CEO and Co-founder, Sebastian Siemiatkowski, to offer 100 million customers the opportunity to ask clarifying questions, submit ideas and feedback.
Originally rolling out in the US and Sweden, the feedback model is structured as a phone call with AI-Sebastian at no cost to the caller. Conversations are summarised at the end of the call, and after passing an internal information flow, are then sent to Klarna product and development teams.
The service offers more opportunities for customer-led improvements as part of Klarna’s mission for increased efficiency — ultimately making online shopping easier for consumers.
BNPL: Growth in the US?
Known for their flexibility and accessibility, BNPL payments have increased in popularity in the US since 2023, when nearly one in five Americans had used a BNPL service. A report lists that 86.5 million customers in the US used BNPL services in 2024.
The number of customers who use BNPL services in the US is already reaching an estimated 91.5 million, with predictions that this could rise to 100.8 million by 2027.
Klarna is the most-offered pay-later service in the US, with 40.1% of all US websites offering Klarna as a payment option.
Additional research from CapitalOne suggests that the current global BNPL market is estimated to be worth US$7.63bn, with projections estimating growth to US$38.6bn in 2030.
