Klarna Bank AB announced that it raised $460 million in a new equity round led by Dragoneer Investment Group, and said the investment values the payments firm at $5.5 billion, making it the largest private fintech in Europe and one of the largest in the world. 

Klarna said the funding will be used to finance its rapid expansion in the U.S., where it is growing at a pace of 6 million new customers per year. The company said it now powers point-of-sale financing at more than 3,000 U.S. merchants, including rue21, Asos, Toms, Superdry, Sonos and others. 

"This is a decisive time in the history of retail banking," Sebastian Siemiatowski, co-founder and CEO of Klarna, said in a company release. "Finally transparency, technology and creativity will serve the customer and there will be no more room for unimaginative products, non transparent terms of use or lack of geniune care for one's customers."

Merchants offering Klarna's Pay in 4 financing program are reporting a 68% increase in average order value and a 44% increase in conversion, compared with those using payment cards.

H&M, Abercrombie & Fitch and Boohoo are set to go live with Klarna soon, according to the company.