Klarna

Revolut

Klarna

Klarna makes money from merchant fees and consumer interest. Merchants pay Klarna 3-6% of each transaction — they're willing to pay because Klarna increases conversion rates by 30%+ and average order values by 45%.

On "Pay in 4" (interest-free installments), Klarna makes money purely from merchant fees. On longer financing (6-36 months), Klarna charges consumers interest up to 25% APR.

Klarna also earns revenue from its shopping app (affiliate commissions when users discover and buy from merchants), and from its Klarna Card.

Revolut

Revolut uses a freemium model with subscription tiers. The free Standard account covers basic spending, transfers, and currency exchange up to $1,000/month at interbank rates.

Plus is $3.99/month, Premium is $9.99/month, Metal is $16.99/month, and Ultra is $45/month — each tier adds perks like higher exchange limits, travel insurance, airport lounge access, cashback, and crypto trading. Revolut also earns revenue from interchange fees on card transactions, crypto trading spreads, and premium business accounts.

Klarna

Sebastian Siemiatkowski, Niklas Adalberth, and Victor Jacobsson were students at the Stockholm School of Economics. In 2005, they entered a startup competition with an idea: let people buy things online and pay later.

At the time, online shopping was still new and most people were terrified of entering their credit card details on the internet. The idea was simple — Klarna would pay the merchant immediately, and the customer would get an invoice with 14-30 days to pay.

The competition judges hated it. The idea was dismissed as financially irresponsible and the team didn't win.

But Siemiatkowski pressed on. Swedish e-commerce was growing fast and merchants were desperate for any way to reduce cart abandonment.

Klarna's "pay after delivery" model was a hit because it shifted the risk — customers could receive the product, try it on, and only pay for what they kept.

The first customers were Swedish e-commerce merchants selling fashion and home goods. Klarna handled the invoicing, fraud detection, and collections.

Merchants saw conversion rates jump because customers were more willing to buy when they didn't have to pay immediately.

Revolut

Nikolay Storonsky was a trader at Credit Suisse and Deutsche Bank in London. Every time he traveled for work, he noticed the same rip-off: banks were charging 3-5% hidden fees on foreign exchange transactions.

You'd pay in euros and your bank would convert at a terrible rate and pocket the difference. Storonsky calculated he was losing hundreds of pounds a year on currency conversion alone.

In 2015, he teamed up with Vlad Yatsenko, a developer, and built Revolut. The first version was simple — a prepaid card linked to an app that offered interbank exchange rates with no markup.

You could hold multiple currencies, switch between them instantly, and spend abroad without getting robbed by your bank. The product launched through a crowdfunding campaign on Crowdcube that raised over $1 million.

The early adopters were frequent travelers, expats, and digital nomads — people who felt the foreign exchange pain most acutely. Word spread fast through London's tech and finance circles.

Within a year, Revolut had 100,000 users.

Klarna

Klarna grew by being embedded at checkout. The strategy was to sign up the biggest online retailers and become a payment option alongside Visa and PayPal.

Once Klarna was at checkout, consumers discovered it organically. The "Pay in 4" button became ubiquitous across fashion, electronics, and home goods retailers.

The Klarna app became a growth engine beyond checkout. By building a shopping app where users could browse products, discover deals, and track deliveries, Klarna turned from a payment method into a shopping destination.

The app has 35+ million monthly active users who start their shopping journey inside Klarna before even visiting a retailer.

International expansion was aggressive. Starting in Sweden, Klarna rolled out across Europe, then into the US, UK, and Australia.

The US became the biggest growth market — American consumers were especially receptive to Pay in 4 as an alternative to credit cards. By 2023, Klarna had 34 million US users.

Revolut

Revolut grew through aggressive multi-market expansion and viral product features. The fee-free foreign spending was the initial hook — travelers told other travelers.

The app added features at a relentless pace: crypto trading, stock investing, budgeting tools, salary advance, and insurance. Every feature gave users another reason to move more of their financial life into Revolut.

The referral program was engineered for virality. Users got cash bonuses for inviting friends.

Temporary metal cards, limited-time perks, and gamified challenges kept users engaged and sharing. Revolut also offered higher savings rates than traditional banks, pulling in deposits from customers who had only used it for travel spending.

Geographic expansion was systematic. Starting in the UK, Revolut rolled out across Europe country by country, then into the US, Australia, Japan, and Singapore.

Each market launch followed the same playbook — launch with the multi-currency card, build the user base, then layer on banking features once they had a critical mass.

Klarna

The valuation collapse was humiliating. Klarna raised at a $46 billion valuation from SoftBank in 2021.

One year later, they raised a down round at $6.7 billion — an 85% haircut. It was the most dramatic valuation drop in fintech history.

Employee stock options were underwater. Siemiatkowski had to lay off 10% of the workforce.

The entire BNPL category went from hot to radioactive in months.

Credit losses are the existential risk. Klarna is lending money to consumers who want to buy things they can't afford to pay for right now.

When the economy slows, defaults rise. Klarna's credit losses hit $1 billion in 2022.

The company had to tighten underwriting significantly and pull back from riskier markets. The tension between growth (approve more loans) and profitability (reject risky borrowers) defines every quarter.

The IPO in 2025 was a comeback story but with caveats. Klarna went public at $15 billion — a major recovery from the $6.7 billion trough but still less than a third of its 2021 peak.

The company finally turned profitable by slashing costs with AI (replacing hundreds of customer service agents with AI chatbots) and tightening credit standards. But investors remain cautious about the BNPL model's long-term sustainability.

Revolut

The work culture has been toxic by multiple accounts. Reports from former employees describe 80-hour weeks, unpaid trial shifts for job candidates, extreme pressure, and a fear-based management style.

Storonsky has been accused of creating a "cult of overwork." High employee turnover and Glassdoor reviews paint a picture of a company that moves fast partly because it burns through people. Revolut has made public efforts to improve culture, but the reputation lingers.

Getting a UK banking license took three years. Revolut applied for a UK banking license in 2021 and didn't receive it until July 2024.

The delay was partly due to concerns about the company's financial crime controls and compliance processes. Without a banking license, Revolut couldn't offer full banking services or FSCS-protected deposits in its home market — a significant competitive disadvantage against licensed neobanks like Monzo and Starling.

Profitability came late. Despite having 45 million customers, Revolut didn't post its first annual profit until 2023 — eight years after founding.

The company had been investing heavily in expansion, new products, and compliance. While the 2023 profit ($545 million pre-tax) was impressive, proving sustained profitability remains the challenge for a company valued at $45 billion.

Klarna

Pay in 4 is the signature product — split any purchase into four interest-free payments over six weeks. Pay in 30 lets customers receive the product first and pay within 30 days.

Financing offers longer-term payment plans with interest for larger purchases. The Klarna App is a shopping destination — browse deals, track orders, manage payments, and earn cashback.

The Klarna Card is a physical Visa card that lets users Pay in 4 anywhere. Klarna Creator is a platform for influencers to earn commissions sharing products.

Klarna AI is their customer service chatbot that handles two-thirds of support queries.

Revolut

Revolut is a financial super-app. Everyday banking covers current accounts, multi-currency wallets, and instant transfers.

Crypto trading lets users buy and sell 200+ cryptocurrencies. Stock trading offers commission-free investing in US and European stocks.

Savings Vaults are auto-saving features that round up purchases. Revolut Business is the commercial banking arm for companies.

Revolut Pay is their checkout solution for merchants. Travel insurance, device insurance, and medical insurance are bundled into premium tiers.

RevPoints is a loyalty program that earns points on every card transaction.

Klarna

Sequoia Capital, SoftBank, Silver Lake, GIC, Atomico, Commonwealth Bank of Australia, Heartland

Revolut

Index Ventures, Balderton Capital, DST Global, Tiger Global, SoftBank, Coatue Management, D1 Capital