It’s not linked to buy now, pay later at all
Klarna has introduced a major new update that allows users to send money directly to each other through the app.
The Swedish company that offers a ‘buy now, pay later’ service is used by millions of shoppers across the UK and Europe. So if you’re wondering if Klarna is “becoming a bank”, here’s what’s really going on.
So, what’s the big change?
Klarna has launched peer-to-peer payments, which means users can now send money directly to each other through the Klarna app. In simple terms, it allows people to transfer cash to friends and family in a similar way to apps like Monzo, Revolut or PayPal.
According to Klarna, the aim is to make everyday payments easier and keep everything in one place. Klarna’s co-founder and CEO Sebastian Siemiatkowski said, “With peer-to-peer payments, we’re making it even easier to manage all of your payments through Klarna, now including small transfers, making managing your money quicker, easier and cheaper.”
Who can you send money to?
At the moment, users can only send money to other people who already have a Klarna account. However, Klarna has confirmed this is only the first stage of the rollout.
The company has said it plans to expand the feature so customers can send money to people who don’t use Klarna, as well as enabling cross-border payments in the future.
So, how does it work?
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Sending money through Klarna is designed to be quick and straightforward. Users can choose who they want to pay by using a phone number, an email address, a QR code or a saved contact within the app.
After the amount is confirmed, Klarna runs fraud and eligibility checks before completing the transfer. The money is sent from the user’s Klarna balance, not credit. This means customers must already have funds in their Klarna wallet.
Klarna says payments sent through the app are protected in the same way as money sent from a traditional bank account. For now, transfers run through standard banking systems.
That said, Klarna has revealed it is exploring the use of stablecoins in the future. This could make payments faster and more efficient. This fits into the company’s wider push to modernise how people move money.
Klarna has already launched a flexible Visa debit Card, introduced tap-to-pay features across several European countries, rolled out cashback rewards and allowed shoppers to split in-store purchases at major retailers.
Speaking about this direction, Siemiatkowski previously said customers are “sick of the friction and fees of traditional banking.” This is why Klarna wants to offer a simpler alternative.
Um, does this affect buy now, pay later?
The new feature doesn’t change how Klarna’s buy now, pay later options work. Payments remain interest-free, although customers can still face late fees if they miss a payment.
Klarna caps these fees at £5 or 25 per cent of the order value, whichever is lower. Also, buy now, pay later purchases do not currently come with Section 75 protection, unlike credit cards. However, this is set to change in July 2026, when new regulations are expected to come into force.
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