UK subsidiary of the innovative BNPL and fintech service provider, Klarna, has achieved a regulatory milestone, which paves the way for the introduction of cashbank and balance features later this year.
Klarna Financial Services UK has received an Electronic Money Institution (EMI) license from the UK’s Financial Conduct Authority (FCA) that allows the fintech firm to operate a wide range of financial services in the country beyond just offering credit or payment processing.
The new license enables financial institutions like Klarna to act as a full-fledged payment processor and manage their own internal money movement infrastructure. Thus, EMIs can create digital wallets and store funds on behalf of their users, facilitate direct bank transfers, card payments, and P2P transfers using stored funds, issue virtual and physical debit cards, facilitate account top-ups and withdrawals, and more.
For Klarna, in particular, the license means a chance to expand its services in the UK from just BNPL lending into account-like functionality, including spending, saving, and reward features. The fintech is using this opportunity to launch new services – Klarna Balance and Klarna Cashback – later in 2025.
The Balance feature is a digital wallet already available to Klarna’s users in the US and 14 different European markets. Customers will have the ability to add funds to their Klarna Balance using a debit card, make purchases via Klarna, receive refunds directly into their balance, and earn cashback on eligible transactions.
Klarna Cashback offers users up to 10% back on purchases made through the Klarna app. Rather than using points or promotional schemes, the cashback is credited directly to the customer’s Klarna Balance, which can then be used for future purchases wherever Klarna is accepted.
Potentially, the firm could also expand the next-gen Klarna Card credit offering that combines debit functionality with flexible BNPL pay‑later options to the UK market, making it more competitive with popular local neobanks like Revolut or Monzo. However, at this point, the new card is only in the pilot stage and available for selected US users.
The EMI regulatory milestone strengthens Klarna’s ambition to transform traditional retail banking and evolve from a BNPL lender into a broader fintech platform with digital wallet, debit card, and real-time payment capabilities.
