BNPL in the midst of a trade war
Despite the headwinds BNPL is here to stay
Disclaimer: views expressed here are my own and do not represent any other organisation
Merchants benefit from offering BNPL payment options in several ways. First, credit and fraud risks are transferred from the merchant to the platform. Second, offering BNPL options allows merchants to reach customers who lack immediate financial means. In some cases, merchants also benefit from non-payment services such as marketing and the data analytics provided by BNPL platforms. This results in a higher share of website visitors who finalise a purchase and an increase in both the number and value of sales.
BIS Quarterly Review, December 2023 (Lux and Epps (2022))
Klarna’s IPO suspended
Six weeks ago, on March 14th, Klarna filed its F1 document with the SEC. An F1 document includes a company’s IPO prospectus and is generally used to generate excitement and whet the appetite of potential investors.
An F1 is the same as the more commonly used S1, but an F1 is for private companies that currently domicile their headquarters overseas. In this case, Klarna has its corporate domicile in London.
Some highlights of the F1 included:
Klarna had 93 million active users across 26 countries in 2024. (Active users are defined in the F1 as those who “made a purchase or a payment using a Klarna-branded product or logged into the Klarna app within the past 12 months”)
In 2024, revenue rose to $2.81bn, up from $2.28 bn in 2023 - a 24% increase.
Most importantly, in 2024, Klara was profitable. In 2023, the company made a net loss of $244m, whereas in 2024, Klarna saw a net profit of $21m.
Everything was looking good, and the company expected to IPO at a $15bn valuation. But on Friday, April 4th, amid a rapidly falling stock market following President Trump’s announcement of widespread tariffs, Klarna suspended its IPO.
A number of upcoming US initial public offerings, including $15bn fintech Klarna… have been postponed as Donald Trump’s aggressive tariffs roil global financial markets. [When a] company publicly files their IPO paperwork with the Securities and Exchange Commission, they put themselves on a footing to launch an investor roadshow after 15 days. Klarna was planning to start the investor roadshow for its $15bn listing next week
The listing has now been delayed indefinitely.
Steve McLaughlin, founder of fintech-focused investment bank FT Partners, told the Wall Street Journal that amidst the market turmoil, there’s no room for IPOs right now. When exactly the market will be ready again is anyone’s guess.
The road to IPO
Klarna’s now-cancelled IPO had been a long time coming. Bloomberg reported that an IPO was in the works way back in December 2019. At that time, CEO Sebastian Siemiatkowski spoke of a float within the next two years yet emphasised that the company wasn’t in a rush to go public. Then came 2020 and COVID-19. The maelstrom that hit the financial markets in early 2020 delayed some IPOs, as the fast-changing market sentiment led to some companies assessing their options.
As the pandemic put global travel on hold, Airbnb was one high-profile IPO delay. The company finally went public in December 2020 in the biggest public offering of the year.
In 2021, both private and public markets were exuberant. Driven by the e-commerce boom from working at home and lockdowns, companies such as Shopify and Alibaba hit all-time highs. Amazon hit a market cap of $1.72 trillion on July 8th 2021 and didn’t return to this level again until mid-2024.
In the private markets, companies such as Stripe achieved a valuation of $95bn in 2021, making Stripe the biggest private fintech company in the world at that time. Stripe’s most recent fundraising, a tender offering to employees and investors in February 2025, saw a valuation of $91.5bn, which is below the 2021 valuation despite payment volume more than doubling during the past four years. In 2024, payment volume hit $1.4trn.
