A Guide to Klarna – Can You Trust the Payment Platform?

Easy access to the Internet has increased the popularity of online shopping. However, the rising cost of living has made it difficult for most people to pay for goods upfront. But thanks to payment platforms like Klarna, you can now buy and pay later. This article explores Klarna as we attempt to find out if the platform is safe to use.

Unpacking Klarna

Formerly known as Kreditor, Klarna began its operations in 2005. Niklas Adalberth and Sebastian Siemiartkowski are the brains behind the payment platform. It secured a banking license in 2017, officially becoming a bank.

Klarna has partnered with multiple e-commerce websites to offer online shoppers the option to buy now and pay later. Data on the payment platform indicates that it is valued at $12 billion as of October 2023.

Moreover, Klarna claims to have over 6,000 employees and 140 million customers across the world.

How Klarna Works

Simply put, Klarna allows customers to buy products from online merchants without paying the full amount immediately. Say you wish to purchase the new iPhone 15 but discover the total price is beyond your budget. In that case, you can find a merchant that supports Klarna and make a deposit, then pay the remaining balance in installments.

Besides paying installments, It is worth mentioning that Klarna also offers a “Pay Later” option, which requires a customer to make payments when goods ordered are delivered.

In regards to paying in installments, Klarna offers two options, “Pay in 3” and “Pay in 4.” The former is available in all the countries where the payment platform operates, while the latter is only offered in the United States.

If you opt for Pay in 3, you will be expected to pay off your purchase in three installments within three months. On the other hand, Pay in 4 requires you to make payments in four installments bi-weekly. Note that Klarna does not charge interest on installments. This is a massive competitive advantage over its rivals.

To start using Klarna, you must provide your date of birth for the platform to verify you are above the age of 18. After the verification, Klarna will ask you if you want to pay using its options. If you agree, you will be directed to another window where you will be requested to choose your preferred payment option.

Note that purchases with a value of less than $39.99 cannot be paid in installments. Only orders worth between $40 and $1,000 can be settled using the pay-in-installments method.

After picking the payment option, Klarna will ask you to approve the transaction by clicking the “Pay With Klarna” button.

Penalty on Late Payments

Klarna expects you to make payments on time. However, the payment platform gives you the option to extend the due date of paying an installment by 14 days. If this extended window elapses and you are still unable to pay an installment, you can reach out to the Klarna team and explain your financial situation. If you don’t do so, Klarna will add the payment to your next installment.

Missing to pay two or more installments will attract a late fee of $7 on each missed installment. Failing to pay your debt disqualifies you from using Klarna until you clear it.

The Klarna Card

Klarna offers its Visa-issued card to users in Germany, the United Kingdom, the United States, and Sweden. The virtual card can be used to pay for shopping from e-commerce sites that support Klarna. All payments made using the Klarna card can be tracked via the payment provider’s mobile app.

Is Klarna Safe?

Klarna is a regulated payment company. That means it adheres to certain policies that ensure user funds are protected.

However, while it offers a convenient way for people to acquire their favorite items online, Klarna can bring financial problems, especially for those who enjoy shopping a lot. For instance, one may purchase several products from various merchants at once, which could put them into debt if they are unable to pay the required installments.