“Buy now, pay later” giant Klarna is putting further pressure on banks and credit card companies by launching its first physical card in the UK.
The card will allow customers to delay payments for up to 30 days when used in large stores, after only offering buy now and pay later (BNPL) products online for UK customers. The Swedish company said it intends to add more of its payment options, including splitting purchases into three monthly payments, to the card over time.
Klarna confirmed it had built up a waiting list of 400,000 consumers in the UK, which it said showed “strong demand for a new approach to credit”, following a successful launch in Germany and Sweden.
Klarna Card is part of the payment giant’s latest effort to compete with major credit card companies and banks that offer consumer loans, giving customers the option to delay payments in physical stores without incurring fees. interest or late fees.
“Consumers reject credit products that charge double-digit interest rates while allowing repayments to be deferred indefinitely,” said Alex Marsh, head of UK operations at Klarna.
“For online purchases where credit makes sense, buy now-pay later has become the sustainable alternative with no interest and clear payment schedules. The launch of the Klarna Card in the UK brings these benefits to the world offline, giving consumers control and transparency from BNPL for all of their in-store purchases.
The company – whose BNPL products are unregulated – has seen explosive growth during the pandemic, particularly among those under 30 and those with tight finances.
But BNPL’s products have also drawn criticism, with consumer body Which? warning earlier this month that stronger guarantees are needed to protect the millions of UK buyers who fail to realize they are going into debt by delaying payments.
Klarna said customers will receive a personalized cap on their spending if they qualify for the card, which will be automatically adjusted after each purchase based on their financial history. It is understood that for most customers the cap is likely to be worth hundreds, rather than thousands, of pounds.
Borrowers will also have to go through credit checks to be eligible for the card.