Klarna Bypassing Visa and Mastercard

The big prize in pay by bank is not faster growth, it is structurally better margins on every Klarna checkout. In a normal card payment, the merchant’s money passes through a chain that includes the issuing bank, payment processor, and card network, with Visa and Mastercard taking network fees. If Klarna can move money directly from a shopper’s bank account to a merchant’s bank account, more of the merchant fee stays with Klarna, and even a roughly 1% fee reduction can flow almost entirely to profit.

• Klarna had already built the rails for this through Sofort and its Open Banking platform. By 2021, it connected to more than 6,000 European banks through a single PSD2 compliant API, giving Klarna the technical path to initiate account to account payments instead of routing every transaction over card networks.
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• This matters because card economics are a stack of tolls. On a $100 card purchase, the merchant may net about $97 after fees, with pieces going to the issuer, processor, sponsor bank, and network. Removing the Visa or Mastercard layer does not eliminate all payment costs, but it can remove one of the highest volume middlemen in Klarna’s checkout flow.
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• The catch is adoption. Open banking worked best in the UK and parts of Europe first, while cards remained the simpler global option for consumer checkout. That means the near term value was less about instantly replacing cards everywhere, and more about giving Klarna a margin lever in markets where bank connected payments were already usable.
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If Klarna keeps expanding from BNPL into a closed loop shopping and payments network, account to account payments become a compounding advantage. The more checkout volume Klarna controls inside its own app and merchant relationships, the easier it is to steer payment mix away from expensive card rails and turn scale into margin.