Klarna, the Swedish fintech giant best known for its “Buy Now, Pay Later” (BNPL) model, has just received an Electronic Money Institution (EMI) licence from the UK’s Financial Conduct Authority. While the move is being celebrated as a key step in Klarna’s post-Brexit roadmap, the question remains: Is Klarna preparing to scale, or just safeguarding its foothold?
What the Licence Means
The EMI licence enables Klarna to:
- Issue and manage electronic money
- Offer payment services like account transfers and card issuance
- Operate independently of EU-based passporting structures
Klarna says the new UK-based Klarna Financial Services UK will now take over local payment and e-money operations, offering a more robust legal and regulatory framework for its British users.
Why Now?
The timing isn’t random. Since Brexit, the UK has become a regulatory island. Fintechs operating under EU licences have had to either exit or secure UK-specific permissions. Klarna had been operating under the FCA’s Temporary Permissions Regime (TPR) — but that window is closing.
With this licence, Klarna ensures continuity of service — especially for its popular app-based features like budgeting, spending insights, and payments.
Strategic Play or Defensive Move?
This is not a banking licence — which Klarna already holds in Sweden. So while it doesn’t allow for lending or deposit-taking, it does give Klarna a long-term anchor in the UK’s payment ecosystem.
From a strategic perspective:
- Klarna strengthens its position in a key growth market
- It gains greater flexibility in rolling out new payment products or integrations
- It avoids regulatory bottlenecks as UK and EU rules diverge
But it’s also a defensive maneuver. Klarna’s valuation was slashed from $46 billion to $6.7 billion in 2022. Locking in operational certainty in the UK is essential to retaining investor confidence and consumer trust.
The Bigger Picture
With the licence in place, Klarna joins the ranks of Apple, Revolut, and PayPal — all of whom hold UK EMI licences. But unlike Revolut, Klarna isn’t fighting for a full banking licence (yet), possibly choosing to stay nimble and focus on payments innovation rather than navigating the PRA’s more complex regime.
This move also aligns with a broader trend: non-bank fintechs cementing local legal entities to hedge against regulatory fragmentation in a post-Brexit Europe.
Final Take
Klarna’s UK EMI licence is more than a formality — it’s a strategic insurance policy that also unlocks fresh opportunities. As regulatory winds shift, Klarna now holds a firmer grip on the UK market.
Whether it uses that grip to grow — or simply to hold on — remains to be seen.
