On Thursday, Klarna, the Swedish fintech giant, introduced two new products that aim to enhance the appeal of its buy now, pay later services.
Consumers in the U.S. and 11 European countries now have the opportunity to conveniently store their money in a Klarna “balance” account. This account allows them to easily deposit money directly from their bank account. Customers have the option to use the funds for either full purchases or to cover their installments through Klarna’s BNPL service.
Klarna has introduced a marketing slogan of “save now, pay later,” according to the company. Klarna currently does not provide interest on their cash account, similar to a traditional savings account in the United States. However, the company has expressed their intention to eventually offer this feature. According to her, it offers an interest rate of up to 3.58% in Europe.
In addition, customers now have the option to receive cash back on their purchases, even if they don’t have a Klarna-issued credit card. Shoppers who use the company app can now receive a portion of their purchases as rewards when shopping at select retailers. The funds will be securely held in their Klarna balance account. The cash-back percentage can vary depending on the retailer, reaching a maximum of 10%. The funding comes from the merchants, not the company. 
The company also mentioned that these cash-storing accounts may provide additional advantages to consumers in the future, although they did not provide any hints about what those benefits might entail.
According to the spokesperson, Klarna Balance is dedicated to providing consumers with faster cash-back payments and refunds. However, they are highly ambitious and have extensive plans to expand the product features gradually.
It’s quite fascinating how a company that initially focused on buy-now, pay-later services has gradually transformed its business model over the years. With the introduction of the Klarna card, the company expanded its services to include traditional banking products. Midway through 2019, Sweden became the first country to offer the card; Germany followed in 2021, and the United Kingdom in 2022. In April, the card was made available to a waitlist in the United States, giving consumers in the U.S. the opportunity to apply for it for the first time. Consumers in the U.S. can now access it.
Klarna has recently announced a new card that offers users the opportunity to earn up to 10% cash back on selected merchants when using the card in its app. However, as previously stated, customers can now earn cash back without having to use the card. Klarna’s card has positioned them as a formidable competitor to industry giants like Apple and Robinhood, as well as their rival BNPL player Affirm, in the United States credit card market. Robinhood provides a savings account option that allows you to earn a 5% interest rate as a Gold member.
It seems unlikely that Klarna will be entering direct competition with Revolut, a highly valued digital bank in Europe, in the near future. However, considering the nature of these products, it appears that this is the direction it aspires to go.
