Klarna Bank AB said it raised $1 billion at a valuation of $31 billion, triple the price investors gave the Swedish payments firm during its last funding round, following rapid growth in its US business. Europe’s most valuable startup initially set out to raise $500 million. Klarna Chief Executive Officer Sebastian Siemiatkowski said high investor demand led to this doubling, but could have gone as high as $3 billion. It had been valued at $10.6 billion as recently as September.

“What definitely has accelerated and changed is the success in the US market,” Siemiatkowski said in an interview. Investors are seeing Klarna getting ahead of its competitors, he said. “I think that has changed the perspective and changed the view on our valuation.”

The company has about 90 million users worldwide and the US is on track to overtake Germany as its biggest market by the end of 2021. It said last week it had signed up 20 of the top 100 brands in the US and attracted a million new customers a month there in the last quarter of 2020.

Klarna competes with PayPal Holdings Inc. and Square Inc. as well as traditional credit cards. It lets customers “buy now and pay later” in four interest-free installments when they shop online or in store with brands such as Abercrombie & Fitch, H&M, Adidas and Lululemon. Retailers give it a cut of purchases to cover costs. It also offers savings accounts and other banking services.

Financial technology companies have seen more people take advantage of their products during the pandemic, which spurred a shift to e-commerce while stores were forced to close. Klarna has previously said it doesn’t expect the roll out of vaccines to completely reverse that trend, as shoppers have learned new habits.

But the interest-free buy-now pay-later business model has also faced scrutiny from regulators, such as in the UK, where they’re concerned it encourages people to spend more than they can afford. PayPal launched a similar point-of-sale loan product in Britain last year.

Siemiatkowski said the fresh funding would help Klarna further challenge the credit card industry. Buy-now pay-later services offered a more egalitarian system by giving every consumer the same offer, he said.

“There’s a number of investors out there that agree with us,” he said. “They see that this credit card industry is actually at its core flawed and needs some innovation.”

Klarna will use some of the money to acquire technology companies. Siemiatkowski said he was “less keen” on M&A with competitors because of the complexities of integrating new services, but was interested in targets that could help people save time or money. He said about $10 million would also be donated to organizations helping to combat climate change.

As the company’s valuation has soared, so has speculation about a public listing. Siemiatkowski said he would wait to get his incoming chief financial officer, Niclas Neglen, settled in the coming weeks before making any decisions. He said he was “excited and intrigued” by the idea of a direct listing and wasn’t ruling anything out for as soon as this year.

More than 30 existing and new investors participated in the round announced Monday, which Bloomberg first reported last week. Klarna didn’t name any of the investors but existing backers include Silver Lake, Sequoia Capital, Singapore’s sovereign wealth fund GIC, BlackRock Inc. and HMI Capital — as well as the rapper known as Snoop Dogg, who also appears in some of the company’s advertisements.

By Natalia Drozdiak