Klarna Bank AB won approval to offer credit and payment products in the UK, though the new authorization excludes the company’s popular buy-now-pay-later loans.
The Financial Conduct Authority’s new authorization allows it to continue operations in the UK market just as a temporary approval it received in the aftermath of Brexit was due to expire in just five weeks, according to a statement. The Stockholm-based company established a UK-based entity, Klarna Financial Services UK, to offer all of its consumer-facing products in the country.
The firm, which has a full European banking license, had rolled out term loans and card products in the UK in recent years, which are covered under the FCA’s authorization along with the open banking-based payment services it provides. The firm said it has long argued that its buy-now-pay-later offerings should also be regulated.
“The FCA approval puts Klarna’s successful UK business on a secure regulatory footing ahead of the expected regulation of BNPL,” Abby Vickers, head of Klarna Financial Services UK, said in the statement.
Earlier this month, the fintech reported its first quarterly operating profit in four years, giving it a boost as it lays the groundwork for an initial public offering. Klarna, once Europe’s most valuable startup, offers credit to about 150 million shoppers globally looking to spread out the cost of online purchases.
“Being authorized for regulated lending means that the FCA has assessed a firm’s approach to ensuring interest bearing loans are affordable for consumers and that firms are offering suitable forbearance to consumers in financial difficulty,” the FCA said in a post on its website on Thursday, which did not mention Klarna by name. “Amongst other things, firms are required to demonstrate their approach to dealing with vulnerable customers.”