Klarna's Open Banking Margin Play

The strategic prize is margin control. If Klarna can move part of checkout from card rails to direct bank payments, it keeps more of every transaction and gains tighter control over the whole flow, from underwriting the shopper to settling the merchant. That matters because Klarna already pays card processing costs today, and even a roughly 1% reduction in payment costs can flow straight into transaction margin.

• Klarna built this path years ago through Sofort and its Open Banking platform. By 2019 it launched payment initiation and account information services under PSD2, and later expanded open banking settlements to 18 million consumers and 32,000 retailers. This is the plumbing needed to route money bank to bank instead of through Visa or Mastercard.
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• The economics are unusually important for Klarna because its merchant business already absorbs card processing, funding, and credit costs. In the core model, every $100 of GMV produced about $1.55 of net transaction margin in 2020, so shaving payment costs has an outsized effect on profit compared with a software business that already has high gross margins.
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• This is less about instantly replacing card networks than about giving Klarna another payment rail where open banking is mature. UK and European account to account infrastructure has improved, including roadmap completion in the UK, but card networks still win on broad merchant coverage and cross border ubiquity. The opportunity is strongest where Klarna already has bank connectivity, repeat users, and merchant density.
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The next step is Klarna turning pay by bank into a default option inside its shopping and banking products. If that happens, Klarna stops being only a BNPL button and starts looking more like a parallel commerce network, one that owns consumer intent, payment initiation, and merchant settlement on the same stack.