Buy now, pay later pioneer Klarna has launched peer-to-peer payments in 13 European countries, expanding its services as it moves closer to becoming a full-service digital bank. In a market already crowded with P2P apps, Klarna’s millions of existing users could give it a competitive edge.
For now, Klarna users can only send money to people who already have a Klarna account. However, the company plans to expand the feature to allow transfers to non-Klarna users and enable cross-border payments.
The service is designed to integrate with Klarna’s existing offerings. Transfers are sent from the user’s Klarna balance, and funds are only sent once the amount is confirmed and eligibility and security checks are completed.
A Full Range of Banking Services
As it expands its services, Klarna already holds a full banking license in the EU. It has yet to obtain similar status in the U.S., although it launched its IPO in September. The Klarna Card, its first debit card, has already reached 4 million sign-ups following its debut in July 2024.
“Klarna continues to signal that it wants to be more than just a BNPL provider,” said Ben Danner, Senior Analyst, Credit and Commercial at Javelin Strategy & research. “They have launched debit cards, are now offering P2P services, and are driving customers to spend more and more time within their app.”
A Mature Market
P2P apps are more popular in the EU than in the U.S., driven by Europe’s greater acceptance of open banking. Most European countries offer several local P2P services, and in many markets, the sector has already matured. Bizum, for example—owned and operated by leading Spanish banks—dominates the P2P market in Spain, one of the 13 countries where Klarna’s service will be available.
This presents barriers for new entrants. Meta, for instance, spent eight years trying to establish its own P2P service in Europe before quietly shutting it down earlier this year.
“It’s difficult to get people to switch away from a P2P method that they are already comfortable using,” said Danner. “It will be an uphill battle challenging a lot of major players already out there. However, millions are already using Klarna, and therefore this is really a product enhancement with little friction.”
