Swedish fintech Klarna has received an electronic money institution licence from the Financial Conduct Authority, setting the firm up to compete with UK firms Monzo and Revolut.
The licence will allow Klarna to offer its 11 million UK customers savings accounts and also pave the way for a debit card launch.
Abby Vickers, Klarna’s head of financial services UK, hailed the approval as the “next big step in the UK” as it seeks to extend operations.
Vickers said “traditional banks are still playing catch up,” as she touted the fresh permissions as ramping up Klarna’s offerings for finance management.
The licence approval comes as the fintech looks to diversify away from its flagship buy now, pay later loans.
The UK government launched a crackdown on buy now, pay later providers earlier this year requiring new affordability checks as a part of efforts to make banking standards more consistent.
Klarna IPO on ice
Klarna set out plans to IPO on the New York Stock Exchange earlier this year, but was quickly derailed after President Donald Trump’s tariff onslaught.
The company has significant ties to US and China trade due to its prevalence on Chinese ecommerce websites Temu and Shein, which were at risk of the White House’s protectionist policies.
Klarna is anticipated to take a second shot at a public listing in the near future, following US fintech Chime’s successful IPO.
But recent months have marked a headache for the firm after it recorded a net loss of $99m for the first quarter of 2025 after a surge in failed loan repayments.
Consumer credit losses topped $136m – marking a 17 per cent rise. The proportion of loans not paid back – its credit loss rate – edged up to 0.54 per cent from 0.51 per cent.
The firm has also faced a more competitive buy now, pay later market in the last year with the growth of firms such as Zilch and Clearpay.
Klarna has diversified its product range on the back of rising competition with a new “Klarna Plus” subscription services and most recently the launch of physical cards – something rival Zilch has also introduced.