Klarna's Stablecoin Aims to Cut $120B in Cross-Border Payment Fees

Swedish fintech giant Klarna has entered the stablecoin arena with the launch of KlarnaUSD, a U.S. dollar-backed digital asset designed to streamline cross-border payments and challenge legacy financial networks. The stablecoin, developed on Stripe and Paradigm's Tempo blockchain, marks a strategic pivot for the buy-now-pay-later leader, which has long been cautious about cryptocurrency according to reports.

KlarnaUSD is positioned to capitalize on the surging stablecoin market, where annual transaction volumes now exceed $27 trillion, according to McKinsey. The token will initially operate on Tempo's testnet and is slated for a mainnet launch in 2026. By leveraging Tempo's infrastructure-a blockchain purpose-built for payments-Klarna aims to reduce the $120 billion in annual fees generated by traditional cross-border transactions, offering faster and cheaper alternatives for consumers and merchants.

The move reflects a dramatic shift for Klarna's CEO, Sebastian Siemiatkowski, who once dismissed crypto but now touts its potential. "Crypto is finally at a stage where it is fast, low-cost, secure, and built for scale," he stated, emphasizing that Klarna's 114 million customers and $118 billion in annual gross merchandise value (GMV) position it to "challenge old networks" according to market analysis. The stablecoin's development aligns with regulatory tailwinds, including the U.S. GENIUS Act and Europe's MiCA framework, which provide clearer guidelines for stablecoin operators as research shows.

Klarna's partnership with Stripe deepens an existing relationship spanning 26 markets. The stablecoin is built on Open Issuance by Bridge, a Stripe-owned platform acquired for $1.1 billion earlier this year. Tempo, launched in September, has already raised $500 million at a $5 billion valuation, with input from firms like Visa and OpenAI. This collaboration underscores Klarna's ambition to integrate blockchain into its core payments infrastructure while expanding into new crypto initiatives, with additional partnerships expected soon.

Financially, Klarna enters the stablecoin race with strong liquidity. Despite reporting a $3.2 billion revenue in the past year and trading near 52-week lows, the company's current ratio of 29.46 provides flexibility for innovation. Recent third-quarter results showed 23% year-over-year GMV growth, bolstering its case for diversifying into digital assets. Analysts note that stablecoins could overtake traditional payment networks by the end of the decade, a trend Klarna aims to accelerate.

The launch also aligns with broader industry momentum. PayPal and Stripe have already introduced stablecoins, while regulatory clarity in the U.S. and EU has spurred institutional interest. JPMorgan recently highlighted that Circle's USDC has surpassed Tether's USDT in on-chain activity, signaling a maturing market according to industry analysis. Klarna's entry reinforces the shift as fintechs and banks alike seek to harness blockchain for efficiency and scalability.