Klarna to own product discovery

Klarna is trying to win the category by becoming the app younger shoppers open before checkout, not just the button they see at checkout. Its merchant base skews toward brands that younger consumers browse often, which keeps Klarna visible earlier in the shopping journey. That matters because PayPal already owns far more merchant acceptance, so Klarna needs habit and brand affinity to avoid competing only on price and ubiquity.

• Klarna’s app was already pulling users upstream in 2020, with about 35% of U.S. volume coming through the app, where shoppers could browse featured stores, save wish lists, see recommendations, track deliveries, and generate one time cards to shop anywhere online.
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• For merchants, that youth focused traffic is valuable because Klarna is selling more than financing. Klarna made about 74% of revenue from merchant commissions and marketing, and was sending roughly 700K daily leads to U.S. merchants, which helps justify higher merchant fees than a plain payment button.
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• PayPal had the opposite shape of advantage. It had much broader acceptance, 54% of websites versus 1.2% for Klarna, and could add Pay in 4 at no extra merchant cost. That makes PayPal easy to distribute, but weaker as a branded shopping destination that shoppers seek out on purpose.
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The next phase is a fight over who owns product discovery and shopper identity before payment. If Klarna keeps turning BNPL users into repeat app users, it can become a merchant acquisition channel with better data, more ad inventory, and more reasons for shoppers to start inside Klarna. That is the path from lender to consumer commerce platform.