diff --git a/packages/lib/src/components/Klarna/components/KlarnaWidget/KlarnaWidget.test.tsx b/packages/lib/src/components/Klarna/components/KlarnaWidget/KlarnaWidget.test.tsx
new file mode 100644
index 0000000000..e0f186a0ed
--- /dev/null
+++ b/packages/lib/src/components/Klarna/components/KlarnaWidget/KlarnaWidget.test.tsx
@@ -0,0 +1,141 @@
+import { h } from 'preact';
+import { fireEvent, render, screen } from '@testing-library/preact';
+import { KlarnaWidget } from './KlarnaWidget';
+import Script from '../../../../utils/Script';
+import { KLARNA_WIDGET_URL } from '../../constants';
+import { KlarnaWidgetAuthorizeResponse } from '../../types';
+
+jest.mock('../../../../utils/Script', () => {
+    return jest.fn().mockImplementation(() => {
+        return { load: mockScriptLoaded, remove: jest.fn() };
+    });
+});
+const mockScriptLoaded = jest.fn().mockImplementation(() => {
+    window.klarnaAsyncCallback();
+});
+
+let klarnaObj;
+const originalLocation = window;
+const klarnaInit = jest.fn();
+const getKlarnaActionImp = (res: Partial<KlarnaWidgetAuthorizeResponse> = {}) =>
+    jest.fn().mockImplementation((_, onAction) => {
+        onAction(res);
+    });
+
+describe('KlarnaWidget', () => {
+    const onLoaded = jest.fn();
+    const onComplete = jest.fn();
+    const onError = jest.fn();
+    const paymentData = 'test';
+    const paymentMethodType = 'klarna';
+    const sdkData = { client_token: '123', payment_method_category: 'paynow' };
+    const payButton = props => (
+        <button data-testid="pay-with-klarna" {...props}>
+            Pay with Klarna
+        </button>
+    );
+    const props = {
+        onLoaded,
+        onComplete,
+        onError,
+        paymentData,
+        paymentMethodType,
+        sdkData,
+        payButton
+    };
+
+    beforeAll(() => {
+        klarnaObj = {
+            Payments: {
+                init: klarnaInit,
+                load: jest.fn(),
+                authorize: jest.fn()
+            }
+        };
+        Object.defineProperty(window, 'Klarna', {
+            value: klarnaObj
+        });
+    });
+
+    afterAll(() => {
+        jest.restoreAllMocks();
+        Object.defineProperty(globalThis, 'window', {
+            value: originalLocation
+        });
+    });
+
+    describe('Klarna widget initialization', () => {
+        test('should download Klarna widget script on init', () => {
+            render(<KlarnaWidget {...props}></KlarnaWidget>);
+            expect(Script).toHaveBeenCalledWith(KLARNA_WIDGET_URL);
+            expect(mockScriptLoaded).toHaveBeenCalledTimes(1);
+        });
+
+        test('should show pay button on init', async () => {
+            render(<KlarnaWidget {...props}></KlarnaWidget>);
+            expect(await screen.findByTestId('pay-with-klarna')).toBeTruthy();
+        });
+
+        test('should call Klarna init with client_token', () => {
+            render(<KlarnaWidget {...props}></KlarnaWidget>);
+            expect(klarnaInit).toHaveBeenCalledWith({ client_token: sdkData.client_token });
+        });
+
+        test('should call props onLoaded if Klarna pre-authorization passed', () => {
+            klarnaObj.Payments.load = getKlarnaActionImp({ show_form: true });
+            render(<KlarnaWidget {...props}></KlarnaWidget>);
+            expect(onLoaded).toHaveBeenCalled();
+        });
+
+        test('should call props onComplete if Klarna pre-authorization failed', () => {
+            klarnaObj.Payments.load = getKlarnaActionImp({ show_form: false });
+            render(<KlarnaWidget {...props}></KlarnaWidget>);
+            expect(onComplete).toHaveBeenCalledWith({
+                data: {
+                    paymentData,
+                    details: {}
+                }
+            });
+        });
+    });
+
+    describe('Pay with Klarna widget', () => {
+        test('should call the onComplete if the payment is authorized', async () => {
+            const authRes = { approved: true, show_form: true, authorization_token: 'abc' };
+            klarnaObj.Payments.load = getKlarnaActionImp({ show_form: true });
+            klarnaObj.Payments.authorize = getKlarnaActionImp(authRes);
+            render(<KlarnaWidget {...props}></KlarnaWidget>);
+            fireEvent.click(await screen.findByTestId(/pay-with-klarna/i));
+            expect(onComplete).toHaveBeenCalledWith({
+                data: {
+                    paymentData,
+                    details: {
+                        token: authRes.authorization_token,
+                        authorization_token: authRes.authorization_token
+                    }
+                }
+            });
+        });
+        test('should call the onError if the payment is not authorized temporarily', async () => {
+            klarnaObj.Payments.load = getKlarnaActionImp({ show_form: true });
+            const authRes = { approved: false, show_form: true };
+            klarnaObj.Payments.authorize = getKlarnaActionImp(authRes);
+            render(<KlarnaWidget {...props}></KlarnaWidget>);
+            fireEvent.click(await screen.findByTestId(/pay-with-klarna/i));
+            expect(onError).toHaveBeenCalledWith(authRes);
+        });
+
+        test('should call the onComplete if the payment is not authorized permanently', async () => {
+            klarnaObj.Payments.load = getKlarnaActionImp({ show_form: true });
+            klarnaObj.Payments.authorize = getKlarnaActionImp({ show_form: false });
+            render(<KlarnaWidget {...props}></KlarnaWidget>);
+            fireEvent.click(await screen.findByTestId(/pay-with-klarna/i));
+            expect(onComplete).toHaveBeenCalledWith({
+                data: {
+                    paymentData,
+                    details: {}
+                }
+            });
+        });
+    });
+});