How Klarna Secured US$1.6bn Santander Facility
Klarna has secured a US$1.6bn structured financing facility with Santander, marking the Swedish buy now, pay later provider's second major funding arrangement this month.
The warehouse facility uses Klarna's receivables portfolio in Germany as collateral, allowing the Stockholm-based company to access working capital against future customer payments. Klarna has operated in the German market since 2010.
The deal follows Klarna's US$26bn forward flow financing agreement with Nelnet, under which the company sells newly originated US Pay-in-4 receivables to the student loan servicing firm.
Santander serves as the sole lender in the German facility. The Spanish banking group also competes directly with Klarna in Germany through its Zinia BNPL product, which launched in January 2022, though the underlying technology had been operating in the German market since 2021.
Strategic funding expansion
Chief Financial Officer Niclas Neglén says the Santander arrangement represents “a key pillar of our growth strategy while at the same time enhancing the funding tools available to Klarna”.
He adds that the âtransaction demonstrates strong institutional confidence in Klarna's platform, product performance and credit risk managementâ.
The warehouse structure allows Klarna to monetise its German receivables portfolio while maintaining operational control over customer relationships.
The arrangements come as Klarna reports accelerating revenue growth, with second-quarter revenue reaching US$823m, representing 20% year-over-year growth, up from 15% in the first quarter. Klarna now serves 111 million active consumers through 790,000 merchant partners globally.
The Nelnet arrangement addresses previous challenges where Klarna recorded US$136m in customer credit losses after US customers failed to repay loans.
The credit losses temporarily restricted growth despite partnerships with DoorDash, Stripe and JPMorgan Chase.
Market dynamics and growth
Research indicates that 86.5 million customers used BNPL services in the United States in 2024, with projections suggesting this could reach 100.8 million by 2027.
Klarna represents the most-offered pay-later service in the US, with 40.1% of US websites offering Klarna as a payment option.
Inflation has increased demand for BNPL services, with 25% of respondents in a LendingTree survey requiring BNPL services for groceries, up from 14% the previous year.
The survey also found that almost one in four BNPL users maintained three or more active loans simultaneously.
The global BNPL market is estimated at US$7.63bn currently, with projections suggesting growth to US$38.6bn by 2030, according to CapitalOne research. This market expansion supports Klarna's funding diversification strategy across multiple jurisdictions.
The partnership with Santander creates an arrangement where the funding provider also operates a competing BNPL service in the same market.
This relationship demonstrates evolving dynamics between traditional banks and fintech companies, where competition and collaboration occur simultaneously.
The arrangements occur alongside Klarna's preparations for a potential initial public offering in the United States. Reports in July suggested the company is considering launching its IPO in September after putting plans on hold in April.
Klarna announced in November that it confidentially submitted a draft registration for an IPO with the Securities and Exchange Commission and filed for an IPO with the SEC in March.
