Klarna vs Affirm: A Detailed Comparison of BNPL Services

If you’re looking for BNPL solutions, you can’t overlook Klarna and Affirm, the two most prominent players in the industry with a combined market share of 35%. This naturally begs the question: which is better: Klarna or Affirm? The latter is more prevalent in the US market, but Klarna’s share is just 3% lower. So, let’s take a closer look at the benefits, downsides, terms, and customer experience each service has to offer.

Key Features Comparison: Klarna vs. Affirm

Interest Rates and Fees

Both services don’t charge interest if you use the “Pay in 4” option. However, their extended financing plans often involve interest costs. Precise APR may vary based on your credit score and the length of the loan in question. On Affirm, it can range from 0 to 36%, while Klarna takes a maximum of 21.9%. The shorter the repayment period you choose, the lower the interest costs will be.

Affirm has no hidden charges, including late fees. In contrast, Klarna may charge a $7 late fee for missed installments.

Repayment Terms

Is Klarna or Affirm better at providing flexible terms? Klarna’s primary service is “Pay in 4,” while Affirm payback periods depend on the provider and the purchase value.

With Klarna’s pay-in-four financing plan, you pay 25% of the total amount up front, and the rest is then paid in 3 biweekly installments. If you pay on time, your full purchase will be paid off within 6 weeks, with no additional charges or interest due. If you need long-term financing for a particularly costly purchase, you have the option to go for a repayment plan as long as 36 months. In this case, there’s usually a one-month gap between payments.

Affirm also offers flexible repayment options. Similarly to Klarna, the lender’s repayment terms range from short-term “Pay in 4” plans to extended terms of up to 36 months.

Impact on Credit Score

Does Klarna or Affirm lower your credit score? Both platforms run a soft credit check for pay-in-four borrowings, which doesn’t impact your creditworthiness. However, if you miss a payment to Klarna, it’ll be reported to the credit bureaus, which will lower your rating. Furthermore, if you wish to apply for a long-term loan, you’ll have to cope with a hard credit check. Affirm doesn’t do any of the above.

Purchase Limits

One more difference between Klarna and Affirm is their purchase limits. Klarna doesn’t have a universal spending cap, defining it on an individual basis. It usually depends on your payment history, creditworthiness, and the store you’re dealing with.

Affirm, on the other hand, has a more straightforward fixed limit per purchase—up to $30,000. This means you can make multiple purchases with Affirm as long as each one doesn’t exceed this limit. However, the overall credit limit on Affirm is also variable and is determined by credit score and individual merchant rules.

Mobile Applications

Klarna and Affirm apps are available on iOS and Android. Both apps allow users to monitor their payment schedule, due dates, and payment history. They can also get a clear overview of their account balance, transaction history, and available credit anytime they need.

Klarna app helps users find the best deals on products through its price comparison tool. It also has a personalized AI-powered feed with deals from multiple retailers.

Affirm integrates a prequalification feature into its app, so users can get pre-approved for credit by submitting some personal details before shopping. They also receive tailored recommendations based on their spending habits.

Customer Experience

Is Klarna or Affirm better at creating great customer experiences? Let’s compare these platforms.

Despite the functionality of the Klarna app, its user rating on Play Market is slightly lower than on the App Store—4,7 and 4,9, respectively. Users complain that it takes too long to load card details, especially in rural areas. The app supports 17 languages, but East European languages are not available. Klarna has AI customer support that speaks over 35 languages, 24/7 chat support with specialists, along with traditional phone and email customer service.

Affirm has a similar user rating on the App Store and Play Market—4,9. However, it’s unavailable on some devices, so you should double-check the system requirements. Affirm offers a rather limited list of partner retailers compared to Klarna. However, you can also get an Affirm debit card, which is essentially a Visa card, and is addable to Apple Wallet or Google Pay. There’s no chat support, only phone and email. Users say customer service does a poor job of responding to emails, so it is better to reach the service by phone.

Security and Privacy

Klarna’s security package consists of AES-256 encryption to protect data during transmission and storage and tokenization to replace sensitive data with unique identifiers. The service uses two-factor authentication and complies with regulations like PCI DSS, GDPR, and CCPA.

Strong Customer Authentication further enhances security by requiring multi-factor verification. Additionally, Klarna detects and prevents fraud using powerful risk-management tools based on machine learning.

Is Affirm like Klarna in this regard? Not exactly. The company also uses encryption and tokenization to protect customer data. However, it also has a bug bounty program where experts can help find and fix app and website vulnerabilities.

In addition to machine learning, Affirm also utilizes fraud-scoring models to prevent suspicious activities. But unlike Klarna, it doesn’t adhere to international security standards. Instead, Affirm complies with PCI DSS Level 1 and performs regular audits.

Pros and Cons

And still, what’s better: Klarna or Affirm? Both services have strengths and weaknesses to consider.

Klarna

Pros:

• Ability to shop at any US retailer;
• Several ways to pay for purchases;
• Available in 20 countries;
• Doesn’t charge interest in “Pay in 4” financing;
• Sends price notifications for saved items.

Cons:

• Runs a soft credit check for basic transactions;
• Performs a hard credit check for long-term loans;
• Takes late fees;
• Reports late payments to credit agencies.

Affirm

Pros:

• No late fees;
• Interest-free options for short-term purchases;
• Adaptable repayment plans for up to 36 months;
• No hard credit check.

Cons:

• Conducts soft credit inquiries;
• High interest rates for longer-term loans;
• Limited list of partners.