What is it and how does it work?
Klarna is an innovative payments company based in Sweden. It was started in 2005 by three students and offers payment solutions for businesses and consumers.
Klarna offers “buy now, pay later” payment plans for both online and in-store purchases through its mobile app. Klarna is particularly well known for its “Pay in 3” payment plan which allows customers to pay for their purchase over three equal instalments, with the first one due at the checkout.
Klarna also offers a “Pay in 30” payment plan which allows customers to pay for an item up to thirty days after the item has been purchased. Both payment plans are interest-free.
For businesses, Klarna offers firms the ability to accept credit card payments in addition to the above-mentioned payment plans. The key for businesses is that Klarna pays the firm for the product as soon as the customer makes their purchase.
Even if the customer chooses a buy now, pay later option, Klarna will still pay your business right away. Klarna then takes full responsibility for collecting the payment and dealing with any refunds.
Klarna makes money by charging a fee to businesses for using its services. The fees are deducted from the payments that are due to business users, (from the customers).
The fees depend on the country you’re accepting the payment from, which is worth bearing in mind if you deal with customers outside of the UK. UK transaction fees are 2.49%, plus £0.20.
Klara has 16million users of its app in the UK alone and about 90 million users globally. Using Klarna gives your business an opportunity to access this huge potential customer base.
However, the real value-add for businesses is that Klarna allows you to offer buy now, pay later options to your customers with minimum risk. In the current environment, budgets are tight and being able to offer these payment options to your customers could help you to close a few extra sales.