Buy now, pay later provider Klarna is expanding its revenue stream with a new Visa debit card as it repositions itself for a potential IPO.

The debit card is likely part of Klarna’s strategy to reposition itself ahead of an IPO, Aria Ertefaie, principal analyst at data and analytics company Similarweb, told Bank Automation News. The market is saturated with offerings from traditional banks, neobanks and fintechs, he added. 

Investors are increasingly cautious about BNPL models due to rising default rates, regulatory headwinds and shrinking margins, Ertefaie said.  

“Following losses linked to its BNPL operations, Klarna is under pressure to demonstrate more predictable, diversified revenue streams,” he said. 

The Visa debit card, issued by $2 billion WebBank and launched last week, offers just that. The company previously launched a credit card in partnership with WebBank in 2024. 

Klarna filed for an IPO in March but paused its plans amid macroeconomic uncertainty, as first reported by the Wall Street Journal in April. 

A Klarna spokesperson declined to discuss the IPO with BAN. 

Diversifying revenue  

Klarna is struggling to regain the stellar financial performance that it had when it filed for an IPO just three months ago. 

The company reported 724,000 merchants on its network during the first half of the year after adding major clients like DoorDash, Walmart, eBay, JPMorgan and, most recently, Meta. 

During the first quarter, Klarna reported: 

• Net losses of $99 million, an increase of 110% YoY. 

• Revenue of $701 million, up 15% year over year; 

• Gross merchandise volume of $25.3 billion, up 13% YoY; and 

Klarna’s debit card launch “positions Klarna closer to a neobank or ‘super app’ model, reducing its dependence on BNPL amid intensifying regulations,” Ertefaie said. 

“By facilitating everyday spending, the debit card generates interchange fees and strengthens user engagement by embedding Klarna more deeply into consumers’ daily financial habits,” he said.  

The debit card is designed to promote financial awareness and responsibility, Saumil Misra, senior analyst at think tank Everest Group, told BAN. The added financial literacy tools made available with the card will lead to additional engagement, which the company can monetize eventually, he added. 

Much anticipated IPO 

The fintech IPO window has been a bit of a dud since 2021 amid macroeconomic uncertainty, Lindsay Fitzgerald, founding partner of fintech VC firm Vesey Ventures, previously told BAN. Major companies like Klarna, Chime and Plaid have to make the jump first to give other companies the confidence to join them.  

Late-stage companies going public is also essential for startups, Fitzgerald said, adding that “significant capital is tied up in late-stage ventures,” and mature companies going public will give liquidity to investors to invest in new startups. 

Crypto giant Circle went through its IPO June 4, looking to raise $1.05 billion, according to the company’s release. Shares are trading at $109, up 252% since the IPO. 

Chime and Plaid have also filed for IPOs, looking to raise $823 million and $575 million, respectively, according to SEC filings.