2020 Disruptor 50: Klarna CEO on business model, U.S. market growth

Sebastian Siemiantkowski, CEO at Klarna, a fin-tech company ranked number 5 on the 2020 CNBC Disruptors 50 list, talks the company's U.S. market growth.

Online shopping pretty much has been the only way to buy most things during the coronavirus pandemic, and Klarna is all about making it easier for consumers to do just that. The Swedish online lender has an app that lets customers buy at their favorite stores now — but pay later.

Here’s how Klarna works: A customer making an online purchase enters only their email address and Zip code to buy an item. Klarna pays the retailer immediately and then collects the amount due from the consumer either immediately, in 30 days, in four interest-free payments or over six to 36 months, with interest. The company makes its money predominately through the fees it charges merchants for its service and says that by using proprietary data analytics and modeling, it can give approved consumers a seamless buying experience. The service is available in 200,000 stores, such as H&M, Sephora, Adidas and Abercrombie & Fitch, and has about 85 million users worldwide, including about 6 million in the U.S. The company claims it adds a new merchant every seven minutes.

Since its founding in 2005, Klarna has distinguished itself from other fintech companies by turning a profit every year. In February it reported its first annual loss, after a year of expansion in the U.S. and Europe. Last August it raised $460 million in financing, giving the company a staggering $5.5 billion valuation. Ant Financial, the payment affiliate of Chinese e-commerce giant Alibaba, bought a minority stake in Klarna in March for an undisclosed amount. Klarna counts U.S. rapper Snoop Dogg and Swedish retailer H&M among its investors.

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