Klarna is a "buy now, pay later" (BNPL) service that allows shoppers to purchase items online or in physical stores without paying the full amount upfront. Consumers can either:
- Split their purchase into four equal, interest-free payments every two weeks,
- Pay the entire amount within 30 days without interest or fees, or
- Arrange for longer-term financing with interest (starting around 7.99%) for larger purchases.
Consumers use the Klarna app or select Klarna at checkout, where Klarna performs a soft credit check. Klarna pays the retailer upfront and then collects payments from the consumer over time, assuming the credit risk. The service charges no interest or fees for standard payment plans but can charge late fees for missed payments, with limits to the total charged. Klarna primarily earns money from retailer fees on transactions rather than from consumers. Klarna is widely used globally, partners with many retailers, and offers consumers payment flexibility while helping merchants increase sales and reduce cart abandonment by easing the payment process.
