Klarna Review 2023: Pros and Cons of Buy Now Pay Later

Table of Contents

1. Introduction
2. History and Background of Klarna
3. Klarna's Services and Features
   • 3.1 Buy Now Pay Later
   • 3.2 Three Different Payment Plans
   • 3.3 Klarna Debit Card
   • 3.4 Klarna Rewards Club
   • 3.5 Partnership with Retailers
4. Terms and Fees
   • 4.1 Financing Plans
   • 4.2 Payment Structure
5. Klarna vs. Competitors
   • 5.1 Klarna vs. Affirm
   • 5.2 Klarna vs. Afterpay
6. Impact on Credit Score
7. Reputation and Trustworthiness of Klarna
8. Customer Service
9. Pros and Cons of Using Klarna
10. Conclusion

Klarna: Simplifying Online Shopping with Flexible Payment Options

Klarna, established in Stockholm, Sweden in 2005, is a leading financial technology company that provides innovative buy now, pay later services. With 150 million active consumers and partnerships with over 500,000 merchants in 45 countries, Klarna has revolutionized the way people shop online. Through its user-friendly app and browser extension, Klarna offers a seamless shopping experience, allowing users to split their purchases into interest-free payments and manage their finances effectively.

History and Background of Klarna

Klarna was founded with the mission to simplify the online shopping process by offering easy payment solutions. Since its inception, the company has experienced rapid growth and has become a trusted name in the fintech industry. With a strong emphasis on user convenience and financial transparency, Klarna has gained a loyal customer base and continues to dominate the buy now, pay later market.

Klarna's Services and Features

Buy Now Pay Later

Klarna's primary service is the buy now, pay later option, which allows customers to make purchases without immediate payment. This flexible payment solution appeals to consumers who prefer the convenience of deferring their payments while enjoying their desired products or services.

Three Different Payment Plans

Klarna offers three different payment plans to cater to the diverse needs of its users. Customers can choose to pay in four interest-free installments, pay within 30 days later with no interest, or opt for long-term financing plans with an annual percentage rate (APR) ranging from 0 to 29.99%. These options provide users with the flexibility to manage their budgets according to their preferences.

Klarna Debit Card

Klarna also offers a debit card that can be used to make payments anywhere that accepts Visa, both online and in-store. This card comes with zero percent APR and a monthly fee of $4.99, offering users a convenient way to pay while earning Klarna rewards points on their purchases.

Klarna Rewards Club

Klarna Rewards Club is a free program that allows customers to earn points for every dollar spent with Klarna. Points can be boosted by completing tasks within the app and offer exclusive access to deals and discounts. The program also includes features such as a loyalty cart manager, referral discounts, and a wish list that notifies users of price drops.

Partnership with Retailers

Klarna has partnered with thousands of retailers worldwide, including popular brands like Nike, Sephora, and Wayfair. Customers can shop with Klarna online or in-store, providing them with a convenient and flexible payment option wherever they choose to shop.

Terms and Fees

Financing Plans

Klarna offers financing plans with terms of up to 24 months. The APR for these plans ranges from 0% to 29.99%, depending on the chosen payment schedule. There are no fees for installment purchases below $25. For purchases above $25, late fees are tiered and will not exceed 25% of the order value. Additionally, Klarna's debit card comes with a $4.99 monthly fee.

Payment Structure

Klarna allows users to select a payment schedule that suits their budget. The options include paying in four interest-free installments, paying within 30 days with no interest, or opting for long-term financing plans. The payment structure is designed to accommodate individual preferences and make it easier for users to manage their finances.

Klarna vs. Competitors

Klarna vs. Affirm

When comparing Klarna with Affirm, another prominent buy now, pay later service provider, there are several differences to consider. While both offer similar payment options, Klarna's partner stores include Instacart, Sephora, and Wayfair, among others, whereas Affirm is available at popular retailers like Amazon and Target. Klarna charges interest on long-term installment plans, with an APR of up to 29.99%, while Affirm also charges interest on long-term financing, up to 36% APR. The repayment terms for Klarna range from monthly installments up to 24 months, while Affirm offers repayment terms ranging from one month to 48 months for larger loans.

Klarna vs. Afterpay

Both Klarna and Afterpay are widely accepted payment methods, but their partner stores may differ. Klarna's partner stores include Instacart, Sephora, and Wayfair, while Afterpay is accepted at Target, Shane, Pandora, MAC Cosmetics, and Dyson, among others. Klarna charges interest on long-term installment plans, with an APR of up to 29.99%, while Afterpay does not charge interest on its payment plans. However, Afterpay's monthly installment plans range from 6 to 12 months, depending on the retailer. Late fees for both Klarna and Afterpay are tiered and will not exceed 25% of the original order value.

Impact on Credit Score

When using Klarna's pay in four payment option, a soft credit check is conducted, meaning it won't affect the user's credit score. However, for other financing options, a hard credit check may be required, which will be visible as an inquiry on the user's credit report. It is important to note that late financing payments might also be reported to credit bureaus, potentially impacting the user's credit score.

Reputation and Trustworthiness of Klarna

Klarna is accredited by the Better Business Bureau and holds an A+ rating. Trustpilot users rate Klarna with an average of 4 out of 5 stars, based on more than 162,000 reviews. The company has received consumer complaints, but Klarna has promptly responded and resolved the majority of cases, demonstrating its commitment to customer satisfaction.

Customer Service

Klarna provides 24/7 customer support through its chat function on the website and app. Users can also reach Klarna's customer service team by phone at 844-552-7621. This dedication to excellent customer service ensures that users can obtain assistance and resolve any queries or concerns at any time.

Pros and Cons of Using Klarna

Pros:

• Flexible payment options
• User-friendly app and browser extension
• Wide range of partner retailers
• Klarna Rewards Club with exclusive perks
• Zero percent APR on the Klarna debit card

Cons:

• Late payments may be reported to credit bureaus
• Long-term financing requires a hard credit check and charges interest
• On-time payments are not reported to credit bureaus

Conclusion

Klarna has transformed the way people shop by offering convenient and flexible payment options. With its wide network of partner retailers, Klarna provides users with the freedom to shop online or in-store, enhancing the shopping experience. While Klarna offers numerous benefits, users should be mindful of their payment commitments and terms to avoid any adverse impact on their credit scores. Overall, Klarna remains a reputable and trustworthy financial technology company that simplifies online shopping and improves financial management for consumers.

Highlights

• Klarna offers buy now, pay later services to more than 150 million active consumers across 45 countries.
• Users can choose from three different payment plans, including interest-free installments and long-term financing options.
• Klarna's partnership with thousands of retailers worldwide provides users with an extensive range of shopping options.
• The Klarna Rewards Club allows users to earn points and access exclusive deals and discounts.
• Late payments may be reported to credit bureaus, while on-time payments are not.
• Klarna's customer service is available 24/7 to assist users with their inquiries and concerns.

FAQ

Q: Can I use Klarna for online shopping only? A: No, Klarna can be used for both online and in-store purchases, providing users with a seamless payment experience.

Q: How does Klarna's buy now, pay later option work? A: With Klarna's buy now, pay later option, users can make their purchases without immediate payment and choose to split the payment into installments or pay within 30 days.

Q: Does Klarna charge interest on all payment plans? A: Klarna charges interest on long-term financing plans, but not on other payment options such as four interest-free installments or paying within 30 days.

Q: Can I earn rewards with Klarna? A: Yes, Klarna offers a Rewards Club that allows users to earn points for every dollar spent with Klarna. These points can be boosted by completing tasks within the app and provide access to exclusive deals and discounts.

Q: Does using Klarna affect my credit score? A: Klarna's pay in four option does not affect the user's credit score as it only requires a soft credit check. However, other financing options may require a hard credit check and could impact the credit score.

Q: What should I do if I miss a payment with Klarna? A: If a payment is missed, Klarna will attempt to collect it again in seven days. If the payment still doesn't go through, it will be added to the next scheduled payment along with a late fee. Users can also extend their payment date by 14 days once per order if needed.