MONTREAL — Swedish fintech unicorn Klarna has begun hiring a leadership team in Canada as it prepares to compete with rivals in the country’s growing “buy-now, pay-later” sector.

Among those Klarna has hired for a future Canadian expansion are former senior staffers from Google Canada, Q4, Moneris and Shopify, including a new managing director, Kristina Elkhazin, who previously served as Google Canada’s head of industry for retail. 

“International expansion is a top priority, and the natural North American progression will be a focus on the Canadian market,” Klarna spokesperson Brendan Lewis said; the company is already active in the U.S. “We look forward to offering more consumers flexible and transparent payments and an overall elevated shopping experience, helping merchants reach valuable new customers globally.”

Klarna has made at least nine hires in the country since the beginning of 2021, according to LinkedIn data. The company also has job postings online for 10 Toronto-based roles, spanning functions such as sales, engineering and compliance. The moves have not previously been reported.

Klarna’s expansion comes as the BNPL market in Canada shows signs of gaining momentum. Australia-based Afterpay launched in Canada in August, signing deals with domestic retailers including American Eagle, Ardene and Herschel Supply Co. And in January, San Francisco-based Affirm bought PayBright, a Canadian BNPL provider, expanding the former’s domestic presence. 

The company’s core offering allows consumers to pay for retail purchases in four interest-free instalments, rather than paying the full sum upfront. It also offers payment cards and banking products in certain markets. 

Klarna says it has more than 90 million active users worldwide, and has seen rapid growth in the U.S., with users more than doubling year over year as of April, according to its May 28 financial update. When it raised additional funding in June, at a valuation of more than US$45 billion, founder and CEO Sebastian Siemiatkowski said it planned to use the cash to accelerate its global expansion. To date, the company has raised nearly US$4 billion from investors that include SoftBank, Silver Lake, Ant Group and Sequoia Capital, according to PitchBook.

“Consumers continue to reject interest- and fee-laden revolving credit and are moving toward debit while simultaneously seeking retail experiences that better meet their needs,” Siemiatkowski said in a statement in June. “Klarna’s more transparent and convenient alternatives align with evolving global consumer preferences and drive worldwide growth.”

Klarna previously had a footprint in Canada through a partnership with PayBright, the Toronto-based fintech that Affirm acquired. Klarna began hiring in Toronto around the same time as the acquisition, employees’ LinkedIn profiles show.

It appears to have forged at least some partnerships in Canada so far: the Klarna app advertises its integrations with Canadian retailers such as Harry Rosen and Canada Goose. Neither retailer responded to The Logic’s request for comment.

Globally, spending on BNPL services is projected to grow to US$995 billion in 2026, up from US$266 billion in 2021, according to a recent study by U.K.-based market-research firm Juniper Research. The products are especially popular among members of younger generations, who typically have more debt and less money to spend.

The services have grown in popularity since the start of the pandemic, with more consumers shopping online and looking for a way to spread out their expenses over longer time periods. Still, the products are not without risk. According to a study by Intuit-owned Credit Karma, nearly 40 per cent of U.S. consumers who used BNPL services missed at least one payment, and roughly three-quarters of those users saw their credit scores drop.

BNPL services have attracted regulatory scrutiny in some countries, including the U.K. and Australia. In February, the U.K.’s top financial regulator, the Financial Conduct Authority, published a report on the sector and said it planned to bring additional oversight to the area.

“New ways of borrowing and the impact of the pandemic are changing the market, with billions of pounds now in unregulated transactions and millions of consumers at greater risk of financial difficulty,” said Christopher Woolard, former interim head of the Financial Conduct Authority, in a statement at the time the report was published.

On its website, the Financial Consumer Agency of Canada, a federal consumer rights watchdog, warns that risks of using the services include the potential for over-borrowing or misjudging the actual cost of purchases.

In addition to fintechs, established banks are responding to the demand for more flexible payment products: Visa Canada said last month that, along with Scotiabank, it planned to offer a BNPL service. Meanwhile, Apple is reportedly working with Goldman Sachs on an installment-payment plan to be offered through Apple Pay, though it is unclear when that product would be available in Canada.