To those of you who doesn't know Klarna, it's pretty big in Sweden (and also used in the other Scandinavian countries).
When you order a product online, you will not pay by credit card. Instead, you will receive an invoice with the product - so you don't pay until you have it. Furthermore, they'll give you 30 day credit, and can even split the payment over several months (3, 6, 12, 24 or 36) for an extra fee.
It's pretty easy to pay by installments. You get the invoice with the full amount to pay. If you then pay a lower amount (e.g. full_amount/12 to pay over 12 months), you will automatically be transferred to the split plan, and get a new invoice every month for 10 months.
I think it's very used in Sweden, where they've had an habit of paying via invoice instead of credit/debit card for years.
Klarna tried a few years ago to enter the market here in Denmark, but I don't think it has been a huge success. People in Denmark are more used to just pay with credit card, and I think that's the same problem Klarna will face in the US.
Hard to look past the success they've had elsewhwere but I'd be surprised if this flies in the U.S. Just sounds like a lot of extra clunkiness with modest or no benefit to anyone (besides Klarna, of course). Many/most Americans are way overextended as it is.
> you will receive an invoice with the product - so you don't pay until you have it. Furthermore, they'll give you 30 day credit, and can even split the payment over several months (3, 6, 12, 24 or 36) for an extra fee.
How is this different and better for me than a credit card? Using a credit card I don't have to pay until the end of the credit cycle, which usually is after I receive the product, and pay over a longer term for the 'extra fee' of interest. The credit card company also reverses charges for items I don't receive, protects me from fraud (over $50), and provides a host of other services such as frequent flier miles, insurance, etc.
> How is this different and better for me than a credit card?
Klarna let you choose between invoice and credit card in their checkout (which is embedded in the retailer website, similar to other payment solutions).
Although they started out with invoices, I think they are better described as a payments platform these days.
> what are their interest rates?
According to this document[1] on Germany, 10% - 15%. I found it through a Google search, don't know if it holds for the US.
Well, I guess the main driver is "one click buy" (tm) - that you don't have to bother with spending time on entering the credit card details, security questions, etc.
You click "buy" and then you are done. Off course, later you will have to do all the boring stuff...
Is the difference between old (credit card) and new (Apple Pay, Klarna) payment services is merely UI? That is, credit cards require either a card reader or for the user to type in lots of digits, and the new services are one click.
> (and also used in the other Scandinavian countries)
I've been living in Norway since 1986 and have never heard of them.
Although paying by invoice is quite common for services (builders, car mechanics, etc.) it is less so for goods unless you are a company. Invoices and direct bank transfer used to be the usual way for pretty much everything but is, I think, becoming less common all the time except for high value goods like cars where most people's credit cards would not have a high enough limit.
When you order a product online, you will not pay by credit card. Instead, you will receive an invoice with the product - so you don't pay until you have it. Furthermore, they'll give you 30 day credit, and can even split the payment over several months (3, 6, 12, 24 or 36) for an extra fee.
It's pretty easy to pay by installments. You get the invoice with the full amount to pay. If you then pay a lower amount (e.g. full_amount/12 to pay over 12 months), you will automatically be transferred to the split plan, and get a new invoice every month for 10 months.
I think it's very used in Sweden, where they've had an habit of paying via invoice instead of credit/debit card for years.
Klarna tried a few years ago to enter the market here in Denmark, but I don't think it has been a huge success. People in Denmark are more used to just pay with credit card, and I think that's the same problem Klarna will face in the US.