Klarna has applied for its own US bank charter — and the most consequential detail is who it leaves behind. The Buy Now, Pay Later (BNPL) group has filed with the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions to establish Klarna Bank USA, a Utah-chartered industrial bank that would let it run deposits, payments and credit in-house rather than through its long-time sponsor, WebBank. For a fintech sector that has spent a decade renting bank charters, the move reframes the partner-bank model itself: the largest BNPL lender in the US is choosing to become the bank it used to borrow from.
That disintermediation is the story. Klarna says it has extended more than $91.3 billion in credit to US customers since 2019 and serves roughly 30 million Americans a year, with its Klarna Card surpassing five million users in the first quarter. Under the industrial loan company (ILC) route, Klarna Bank USA would be a wholly owned, FDIC-insured subsidiary with its own independent board and governance — a structure that keeps the parent out of Federal Reserve holding-company supervision while still granting direct access to insured deposits. Salt Lake City-based WebBank currently provides Klarna’s debit cards, digital wallets and FDIC-insured savings; the charter would end that reliance.
Klarna is not alone in the charter queue, and that context matters for the sector. American Banker notes that Affirm, PayPal and Payoneer have all pursued US bank charters, echoing the earlier ILC push by Square. The pattern is consistent: once a fintech’s lending volume outgrows the economics of a rented balance sheet, owning the deposits becomes cheaper and stickier than paying a sponsor. Regulators, for their part, have grown more receptive to industrial charters in Utah than to full national-bank applications, which helps explain the venue.
The strategic logic is about retention as much as cost. “The transition to in-house operations from the partnership model is a big deal,” said Ben Danner, Senior Analyst at Javelin Strategy & Research. “Building a deposit customer base is sticky and reduces churn opposed to those who occasionally use their BNPL product and bank elsewhere. Rather than operate ‘like’ a bank, now Klarna will be a direct competitor.” That reframing — from bank partner to bank rival — is precisely the tension incumbent lenders and BaaS providers now have to price in.
Klarna’s own framing leans on trust rather than disruption. “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 Chief Executive of Klarna, in the company’s application announcement. Gary Harding — former chairman and CEO of Milestone Bank and ex-president of Prime Alliance Bank — has been lined up to run Klarna Bank USA, a hire that signals Klarna wants regulator-fluent leadership, not just fintech growth operators.
For the wider fintech infrastructure layer, the read-through is uncomfortable. Sponsor banks and Banking-as-a-Service (BaaS) middleware have built revenue on exactly the arrangement Klarna is unwinding, and the same in-housing calculus applies to any large program manager. It arrives as payments incumbents deepen their own platforms — Visa, for instance, has taken agentic payments live with 30 European issuers, Klarna among them, while infrastructure consolidation continues with deals like Citi-backed Talos buying Coin Metrics. The talent flow tells the same story, with senior operators increasingly moving between fintechs and regulated institutions.
Approval is not guaranteed, and ILC applications can sit with the FDIC for a year or more. But the direction is set: if Klarna Bank USA clears, expect Affirm and PayPal to press harder on their own charters, and expect sponsor banks to defend margins by moving up the value chain. The reporting to watch over the next two quarters is the FDIC’s comment period — the clearest signal of whether the regulator treats a BNPL-to-bank transition as competition or as concentration risk. Coverage from FinTech Global and Finovate will track the docket.
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.
