What Is Klarna and How It Works?
Whether you are an avid shopper or just like to occasionally browse your favorite web store, you’ve probably had to postpone your more pricey purchases on more than one occasion. Is there a way to avoid it without dealing with credit card loans and the like? Well, of course! This is what buy-now-pay-later (BNPL) services aim to achieve, and today we’re going to review one of them.
Klarna is a popular BNPL service, offering flexible payment plans tailored to the needs of modern retail customers. What is Klarna? How does Klarna work? How does it benefit shoppers and merchants? Let’s find out.
Klarna: What Is It?
Klarna is a global financial technology company founded in Stockholm, Sweden in 2005 with a mission to make online payments simpler and safer. Since then, it has expanded to 45 countries, partnered with 575,000 retailers worldwide, and gained 85 million active users, with 34 million of them in the US alone.
Processing 2.5 million transactions daily, Klarna partners with online and offline stores to offer the customers an alternative to traditional credit or debit cards. This way, all parties involved stand to benefit: the customers get better loan terms, the providers get increased sales, and the platform gets to profit from the cut it takes.
Klarna key features
To better understand how Klarna works and what makes it so popular, let’s look into its major characteristics, which include:
- Flexible payment options: With Klarna, shoppers can receive items immediately and then pay in a way that fits their budget, whether that means paying the entire sum at a later date or spreading payments over several weeks or months.
- User-friendly app: The Klarna mobile app lets users manage payments, browse deals from partnered stores, track purchases, and even earn cash back. It’s well-designed, and makes it easier to keep your finances in check.
- Advanced browser extension: Add the Klarna extension to your browser and enjoy the best shopping opportunities by comparing prices, spotting the best coupons, and benefiting from innovative payment options.
- Global reach: The service operates internationally, and there’s a good chance your favorite retailer supports this payment option. From clothing and electronics to home appliances, Klarna’s network is notoriously vast.
Klarna: How Does It Work and How to Use It?
Designed for the modern customer who gravitates toward digital shopping and prioritizes smart and quick payment solutions, Klarna is available as a multifunctional app or top-of-the-line browser extension.
To start using Klarna, make sure you comply with the service eligibility criteria. You should:
- Be at least 18 years of age;
- Be a US resident;
- Have a valid bank card or account;
- Have a verifiable email and mobile phone to complete registration;
- Have a good credit rating to access Klarna’s payment flexibility to the full.
Service availability
What is Klarna Pay good for? The service partners with thousands of physical and online stores to make essential products, necessities, and some fancies from your wish list more accessible. You can check the full list of partner stores here.
You can even use Klarna with some subscription or on-demand service providers. However, the service won’t help you with:
- Utility or rent bills;
- Medical services;
- Fines, regulatory and governmental services;
- Drugs, alcohol, gambling, and gaming;
- Gift cards.
Registration
To access Klarna when shopping, you should register with the service first. With no sign-up or usage fee in place, the registration process is quick and straightforward.
- Download the app or visit the platform’s website;
- Tap a “Log in” tab;
- Enter your email and phone number. Once both are verified, you can choose either as your preferred login method;
- In a “Control center”, you can set up a face/touch ID or a PIN;
- In a “Control center”, locate the “Payment method” tab to add a card or bank account for future payments. Klarna allows you to save multiple payment options for flexibility during checkout.
Notably, during sign-up, Klarna will not perform any credit history checks. However, once you place your first purchase, the service will file a soft inquiry before completing the transaction. Thankfully, this check won’t affect your credit score.
Payment options
When you pick Klarna as your payment method during checkout, you can choose one of the four available payment options:
- Pay now: Pay the purchase full amount immediately, just like when using a debit card or direct transfer.
- Pay in 4: Split the cost of your purchase in 4 equal installments, with a primary installment due during checkout and the remaining 3 payable every 2 weeks. If you’ve ever wondered “Does Klarna have interest?”, we’re happy to assure you the service is interest-free.
- Pay in up to a month: Postpone your payment up to 30 days, with no advance payments or interest. This option allows you to receive, review, and even try your items before paying.
- Financing: For high-ticket purchases, Klarna offers longer-term financing plans with interest. This option requires a credit check, but makes you eligible for extended payment plans (up to 24 months!).
Payment management
Both the Klarna app and website dashboard let you track all your past and current purchases, so you can always check what you owe and when payments are due. The service also sends automatic reminders via email or SMS for upcoming payments to help you stay on schedule.
If you want to pay off an installment early or pay the total balance before the due date, you can do it from your account. To help you avoid missed payments and late fees, Klarna allows for due date extensions. You can extend the due date in the “Purchase” section by tapping on the payment you want to postpone. Note, though, that this function is not available for financing.
Klarna Advantages
Klarna has become such a popular payment solution worldwide for a reason. The company’s unique approach to payments and customer experience creates value for consumers and merchants alike.
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Final Thought
Most Klarna reviews we’ve seen praise this service, and we can see why. This BPNL provider is more than just an appealing payment method. It’s a unique financial tool that enhances shopping for customers and drives business growth for retailers at the same time.
