Meet Klarna: Afterpay’s new rival that you can use everywhere
The global payments app has launched in Australia.
Swedish buy now pay later provider Klarna has officially launched in Australia, promising to shake up the market and bring a new shopping experience to Australian consumers.
Established in 2005, Klarna positions itself as the original buy now pay later platform that has grown into a global shopping phenomenon. Klarna has 85 million consumers, over 1 million transactions a day on the platform and over 205,000 merchants. It also has Snoop Dogg as an investor.
Klarna is entering a crowded buy now pay later market in Australia, with heavyweights such as Afterpay, Zip and Humm having gained considerable market share. But Klarna CEO Sebastian Siemiatkowski believes there are a number of points of difference that set it apart.
"I got a lot of questions from some of you in regards to well, aren't you in this buy now pay later space? Aren't there a lot of other companies doing that?" he said at a launch event held in Sydney this week. "It's so many more things than just the ability to pay in four."
The most notable difference is that the Klarna app can be used for purchases with any Australian merchant. It does not have to partner with merchants in order for users to split the cost of a purchase there.
After they've been approved, Klarna users can browse for items they want to buy on the app. The app lets them browse at any Australian merchant. Once they've added items to their cart, Klarna auto-fills the purchase information with a "ghost" (virtual) card that is connected to their Klarna account. The card is used to make the purchase with the retailer as normal, but the customer's purchase is then split into four equal instalments with no interest or fees provided they pay on time.
To be approved to use Klarna, consumers will need to undergo a credit check each time they make a purchase to ensure they can afford it. Klarna also uses its own algorithms to determine what a customer can afford. There are no set minimum and maximum amounts for purchases, with the limits being dynamic depending on a customer's repayment history and how much it's determined they can afford to repay.
Other features of the shopping app include the ability to create wishlists and set up price drop notifications. Users will also see a visual purchase history in the Klarna app as well as digital receipts. Delivery tracking will be launching soon.
"Australian consumers' expectations are evolving, they demand seamless, intuitive and transparent online shopping services that better meet their daily needs," said Siemiatkowski. "Klarna streamlines this experience from browsing to payment at checkout to post-purchase which allows consumers to take control and shop on their terms all from a single app."
Klarna has also partnered with CBA which will see the bank's customers able to connect their bank account to a Klarna account.
"Our partnership with Klarna will further enhance the customer experience in our leading banking app and address the rapidly growing demand among consumers for new payment options," said CBA CEO Matt Comyn.
The Klarna app is currently available for download on iOS and Android.