Users can earn up to 10% cash back at select merchants when using the card on its app
Klarna takes off Its credit card in the United States, the Swedish fintech giant told TechCrunch in an exclusive interview.
“It was one of our most requested products,” said David Fock, head of product and design at Klarna, “and it will allow people to pay the Klarna way but with a card.”
By “Klarna way,” Fock means in installments. While the company’s offerings have evolved over the years, it began as a buy-now, pay-later business, giving consumers a way to spread payments over time.
Klarna launched a credit card in the EU several years ago, but this will be the first time consumers in the US can apply for a credit card.
With the Klarna credit card, the company now competes with the likes of Apple and more recently Robinhood as well as rival BNPL Affirm in the credit card offering in the United States. In this effort, it collaborates with WebBank based in Salt Lake City. There is no annual fee for the card, and no foreign transaction fees.
Users can earn up to 10% cash back at select merchants when they use the card on its app, and the card integrates with the company’s AI assistant to find deals on planned purchases, he said. Klarna’s virtual Visa card is compatible with Google and Apple Pay.
For now, people can apply to be on a waiting list for the card, which will be rolled out in the coming months. Customers can pay for purchases either in stores or online. They will have the option after the fact to spread payments for a larger purchase over three to six months, with an interest rate ranging between 14.99% – 33.99%. Alternatively, they can extend the maturity date by one month, also paying 14.99%-33.99% interest on this purchase. While this rate is not unheard of for BNPL to offer (although it can be much lower), it is high compared to standard credit cards, which tend to be closer to 30% on the high end, according to Nerdwallet.
“We want to offer flexibility in payment options, but we don’t want it to be like a credit card that creates revolving credit for consumers,” Fock told TechCrunch. “We see it as a problem that credit card debt in the US is reaching record levels, and we believe that our options are healthier and more sustainable.”
Affirm’s debit card also gives consumers the flexibility to pay upfront or request to pay over time through the Affirm app. And Apple also allows you to pay in installments (although it taps into Apple’s APR out at 29.49%). Where Affirm differs from BNPL cards issued by competitors is that Affirm takes over transactions made using its debit card, according to Affirm’s head of product, Vishal Kapoor.
Like other Klarna BNPL credit cards or options, if users pay off their balances before they’re due, they’ll avoid paying interest, Fock says. “Our customers are usually looking for the free option,” he said. “We really want this to be an extension of how customers are used to using Klarna.”
Of course, Klarna will earn exchange revenue as well as any interest collected.
The Stockholm-based company has seen success in expanding to the US, telling TechCrunch in February 2023 that the country was its biggest market by revenue. (As of last November, this dynamic had continued with Klarna saying it had over 37 million users In the country only.) Today, Klarna said that the US and Germany represent its biggest markets, but that “the US is constantly gaining and is often the biggest on a quarterly basis.”
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