Klarna diversifies beyond BNPL

The big shift is that Klarna is no longer living mainly on checkout tolls, it is turning BNPL from a single merchant fee product into a broader consumer finance and shopping network. In 2020, merchant commission was about three quarters of revenue, built on charging retailers up to roughly 3% to 6% of GMV for conversion and customer acquisition. By 2024, that mix had fallen to 57% as ads, longer duration interest bearing loans, cards, subscriptions, and fees layered on top of the same shopper base.

• The original logic was simple, Klarna paid merchants upfront, took repayment risk, and justified a premium fee by lifting conversion and order size. Retailers could measure that lift directly at bag or SKU level, which made the fee easier to defend than most marketing spend.
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• That merchant fee stream is getting less dominant because checkout BNPL is more crowded. PayPal pushed pay later to its existing merchant base with no added merchant fee in earlier rollouts, and Klarna itself showed net transaction margin falling from about 2.0% in 2017 to 1.55% in 2020, even as merchant commissions stayed large.
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• The mix shift also shows how Klarna is diverging from Affirm. Affirm reached $2.3B revenue on $26.6B GMV in fiscal 2024, leaning into higher ticket financing and platform distribution like Shop Pay Installments, while Klarna processed $105B GMV in 2024 and is monetizing a much larger flow of lower AOV shopping activity with ads, app engagement, and cards.
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From here, Klarna looks more like a commerce network wrapped around payments than a pure BNPL lender. If it keeps turning shopper traffic into ad dollars, card usage, and higher margin financing revenue, the merchant fee line can keep shrinking as a share of revenue even while the shopping network around it gets stronger.