Klarna filed applications with the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC) on July 6, 2026 to establish Klarna Bank USA, a Utah-chartered industrial bank that would end the Buy Now, Pay Later (BNPL) giant’s years-long reliance on partner banks for its US operations. Having tracked the fintech charter queue since Mercury’s conditional approval earlier this year, the striking part is the structure: Klarna is reaching for the industrial-bank charter — the same Utah vehicle Square used in 2020 — rather than waiting on the Office of the Comptroller of the Currency’s (OCC) national route, a choice that trades nationwide branching rights for a materially faster path to funding loans with its own deposits.
The proposed bank would be a wholly owned, FDIC-insured subsidiary of Klarna Inc., with Gary Harding — former chairman and chief executive of Milestone Bank and former president and chief executive of Prime Alliance Bank — named as the proposed bank’s president and CEO, as reported by PYMNTS.
What the charter changes
Approval would let Klarna fund US lending with customer deposits and pull payments, credit and merchant services in-house — replacing the partner-bank plumbing that has carried its American BNPL volume to date. Deposit funding is the economic core: partner-bank arrangements layer programme fees onto every origination, while an FDIC-insured deposit base prices closer to the fed funds rate. The company said the bank would offer “a different kind of bank: transparent, safe, and free of hidden fees, with digital tools and traditional banking products in one place,” per its application announcement on Business Wire.
“Banking is built on trust. We’ve seen firsthand the appetite for a fairer, more transparent approach in the U.S., and our own banking license is the natural next step, giving customers tools to borrow responsibly and build financial confidence, while bringing greater competition, innovation, and choice to consumers and merchants alike,” said Sebastian Siemiatkowski, co-founder and CEO of Klarna. (PYMNTS)
The charter window is open — and fintechs are moving
Klarna’s filing lands in the friendliest US chartering environment in years. Regulators have signalled willingness to approve novel charters, the OCC has updated its chartering rules and moved to publish denial reasoning, and business-banking fintech Mercury secured a conditional approval earlier in 2026, per American Banker. The industrial-bank route via Utah is the tell on strategy: it permits a commercial parent to own an insured depository without becoming a bank holding company — keeping Klarna’s merchant and advertising businesses outside Federal Reserve consolidated supervision.
Distribution keeps scaling while the application sits
The charter is one half of a US push; distribution is the other. Klarna and Southwest Airlines announced a partnership within the same news cycle, putting instalment options — pay in full, four interest-free instalments, or longer financing — into Southwest.com and the carrier’s app later this year, per Investing.com. Airline checkout is high-ticket, high-frequency BNPL territory, and every origination that runs through a partner bank today becomes margin the moment Klarna Bank USA can fund it directly — which is why the two announcements are one strategy.
What it means for the BaaS and partner-bank complex
Every large fintech that internalises its banking stack removes a marquee client from the partner-bank and Banking-as-a-Service (BaaS) ecosystem — the same rotation running in Europe, where SumUp has moved into consumer accounts (see our report on SumUp’s neobank challenge) and bunq has flipped its licence outward into a BaaS platform (covered in our bunq BaaS analysis). US partner banks that built durable fee books on BNPL programmes now face the two largest programmes’ endgame: graduate to charters and take the economics with them. FDIC industrial-bank applications have historically run 18–24 months with public comment periods — incumbents’ opposition filings, a fixture of past ILC fights, are the next thing to watch. The competitive read-across for payment networks runs through our coverage of Visa’s agentic payments rollout.
Watch next: the FDIC comment docket on Klarna Bank USA, whether bank trade groups formally oppose (as they did against past ILC applicants), and whether Affirm — Klarna’s closest US comparator — follows with a charter filing of its own before year-end.
This article is informational analysis only and is not financial, investment, or trading advice. Do your own research and consult a regulated financial adviser before making any investment decision.
Rick Steves
Rick Steves has seen business and economics through many lenses. He joined the financial services industry in 2009, and has been a financial journalist since 2011. He holds a degree in Business Administration and has experience producing real-time news, from both buy-side and sell-side, as well as for retail traders, brokers and service providers. Steves' work has appeared in a variety of online publications including FX Street, NewsBTC, FinanceFeeds, and The Industry Spread. Rick has great interest in the dynamics of the trading industry. The never-ending clash between technology, economics, regulation, and more importantly, the people.
