Klarna makes most of its money from merchants, not from shoppers. Stores pay Klarna a fee when a customer checks out with one of its pay-later options, and that merchant revenue sits inside the line Klarna calls transaction and service revenue, which was $2,500 million of its $3,509 million total revenue in 2025, according to Klarna's annual report on Form 20-F for 2025.
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The rest comes from interest on longer financing plans ($937 million in 2025), gains on selling consumer loans ($73 million), fees paid by consumers and advertising, per the same 20-F. In the first half of 2026, total revenue reached $2,054 million, according to the interim financial statements Klarna furnished on Form 6-K on August 18, 2026. Every figure below comes from those two SEC filings.
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Klarna earns revenue from four sources: fees merchants pay when shoppers use Klarna, interest on longer installment loans, fees consumers pay directly, and advertising sold to merchants. Merchant fees are the base of the model. Interest income grew faster than merchant-driven revenue in 2025 and early 2026 as more shoppers chose longer, interest-bearing plans for bigger purchases.
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Klarna's 20-F describes its revenue model as based primarily on merchant fees and says the proportion of revenue from merchants, consumers and advertising is more balanced than at many card and banking competitors. The table below shows how the reported revenue lines moved between 2024 and 2025 and in the first half of each year.

Klarna reported gross merchandise volume, the value of purchases made through its network, of $128 billion for 2025, up 21% from 2024, according to the 20-F. Revenue grew faster than volume, by 25%, because more of that volume moved into financing products that earn interest.
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Merchants pay Klarna a fee on each purchase a shopper completes with Klarna at checkout. In return Klarna takes on the risk that the shopper does not repay. The fee mixes a percentage of the order value with a fixed amount, and card interchange also counts as merchant revenue.
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Klarna's 20-F defines merchant revenue as fees paid by merchants when consumers transact on its network, including interchange revenue and fees for settling disputes. The auditor's discussion in the same filing says merchant fees are derived from the volume of consumer transactions and a combination of value-based and fixed pricing.
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The interchange piece comes from the Klarna Card, which the 20-F describes as a Visa card that lets consumers use Klarna's payment options in physical stores and online without the merchant integrating Klarna. Klarna reported serving approximately 960,000 merchants across 26 countries at the end of 2025, per the 20-F, and 1,208 thousand merchants at the end of the second quarter of 2026, per the Q2 2026 earnings release.
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Klarna charges interest on its longer financing plans but not on most purchases. Pay in Full and the short Pay Later plans are generally interest-free for the shopper. Fair Financing, which spreads larger purchases over months, carries interest, and that interest has grown faster than Klarna's fee revenue.
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According to the 20-F, 97% of transactions on Klarna's network in 2025 were interest-free. Fair Financing lets consumers pay over three to 48 months, and the same filing says interest income from Fair Financing rose 61%, or $213 million, in 2025. Interest income also rose by $32.5 million from "snooze fees," which consumers pay to push back a Pay Later due date, per the 20-F.
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In the United States, Klarna partners with WebBank to offer Fair Financing. The 20-F says WebBank originates those consumer loans, which Klarna then purchases and services, and that Klarna pays WebBank a volume-based and fixed fee. The 2026 earnings release calls Fair Financing the primary driver of revenue growth, with interest income accruing over the life of each loan.
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Consumers and advertisers are smaller revenue sources than merchants, and Klarna discloses them in less detail than its main revenue lines. Consumers pay certain fees directly and can buy a paid membership. Advertisers, mainly merchants, pay to promote products inside the Klarna app through affiliate programs, sponsored search and brand ads.
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Klarna's 20-F defines consumer service revenue as revenue from fees charged to consumers, and says it rose by $107 million in 2025 on higher consumer fees in markets including Germany and the United States. The same filing lists four Klarna Membership tiers: Core, Plus, Premium and Max.
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On advertising, the 20-F reports $190 million of advertising revenue in 2025 from Klarna's affiliate program, sponsored search and brand ads. Klarna defines that line as revenue paid by merchants who advertise on its network, so advertising deepens the same merchant relationships that generate checkout fees.
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Klarna's biggest costs are processing payments, losses on loans that are not repaid, and the cost of funding those loans. A pay-later lender earns money only if fees and interest exceed those three costs. In 2025 they did not quite, and Klarna reported an operating loss for the year.
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For 2025, the 20-F reports processing and servicing costs of $809 million, a provision for credit losses of $794 million and funding costs of $667 million, leaving an operating loss of $230 million and a net loss of $273 million on $3,509 million of revenue. The H1 2026 interim statements show an operating profit of $44 million for the first six months of 2026, compared with an operating loss of $136 million a year earlier.
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The flow below traces a single Fair Financing purchase in the United States through the parties described in the 20-F.
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Klarna funds most of its lending with customer deposits, because its banking subsidiary, Klarna Bank, holds a Swedish banking license. Deposits are usually cheaper and steadier than market borrowing. Because most Klarna loans are repaid within weeks, the same funding can be lent out many times a year.
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The 20-F says Klarna Bank holds a banking license in Sweden and passports it to other markets in the European Economic Area, and that 90% of its lending activities in 2025 were funded from consumer deposits. The same filing reports a weighted average life of about 39 days for its consumer loans at the end of 2025, with 27 days for Pay Later and 109 days for Fair Financing. As of June 30, 2026, Klarna held $11.7 billion of customer deposits, 88% of its funding, according to the Q2 2026 earnings release.
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Klarna's 2026 filings show revenue growing faster than purchase volume and the company turning an operating profit. The main driver is the shift toward Fair Financing, which earns more per dollar of volume than short pay-later plans. Revenue in the United States grew faster than Klarna's total.
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For the second quarter of 2026, the earnings release reports total revenue of $1,042 million, up 27% year over year, on gross merchandise volume of $36.6 billion, up 18%. The same release reports 120 million active consumers, net income of $9 million against a net loss of $53 million a year earlier, and U.S. revenue up 37% to $376 million. These results were furnished in a Form 6-K dated August 18, 2026.
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Klarna's ownership, including its share classes and voting arrangements, is covered separately in Who Owns Klarna?. For a US-listed peer, see Who Owns Affirm?. For the pay-later brand Block owns, see Who Owns Afterpay?.
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Klarna's filings report revenue by accounting line, not by customer type, so the exact split between merchant, consumer and advertising revenue is only partly disclosed. Interim figures are unaudited, and a single quarter can be distorted by loan sales and seasonal shopping peaks.
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Three limits apply here. First, the 20-F gives totals for transaction and service revenue and interest income, but the merchant fee and consumer fee pieces inside them are described rather than fully broken out, so this article does not estimate them. Second, the H1 2026 figures come from unaudited interim statements. Third, the gain on sale of consumer receivables depends on Klarna choosing to sell loans, so it can swing from period to period.
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Yes. On interest-free plans Klarna's revenue comes mainly from the merchant fee, per its 2025 20-F, not from the shopper.
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Klarna Bank holds a Swedish banking license, which Klarna passports to other European markets, per the 20-F.
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Klarna reported a 2025 net loss of $273 million in its 20-F, then net income of $9 million in Q2 2026 per its earnings release.
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Klarna files as a foreign private issuer on SEC EDGAR, using Form 20-F annually and Form 6-K for interim results.
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Annual figures and business descriptions come from Klarna Group plc's annual report on Form 20-F for 2025 (filed February 26, 2026). First-half and second-quarter 2026 figures come from the unaudited interim condensed consolidated financial statements (Exhibit 99.4) and the Q2 2026 earnings release (Exhibit 99.2), both furnished with Klarna's Form 6-K dated August 18, 2026. All were fetched from SEC EDGAR on October 18, 2026. Klarna's September 2025 IPO prospectus was not used, because these later filings supersede it.
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