Klarna launches a physical card in the UK

adamp87

Klarna has announced it is launching a physical card in the UK through Visa.

The card utilises the company’s buy now, pay later product and lets users defer payments on their purchases both in-store and online.

The Swedish fintech giant already rolled the card out in Germany and Sweden, where it is currently used by over 800,000 people, the company said.

The card will initially only give owners the chance to “Pay in 30”, which allows customers the ability to delay paying the item until next month, however it plans to add additional payment options in the future.

In order to make money on each purchase, retailers which offer the payment solution are charged a small fee on each transaction.

The card comes in either black or pink and sends out a push notification to the user’s smartphone when the transaction has been made, similar to other fintech companies such as Monzo.

It will also allow users to extend the due date on their payment by up to 10 days for free.

The rollout of the card will occur gradually, with all customers set to be eligible by early 2022, users can sign up to waiting list in the meantime.

“For online purchases where credit makes sense, buy now pay later has become the sustainable alternative with no interest and clear payment schedules,” Klarna head of UK Alex Marsh said.

“The launch of Klarna Card in the UK brings those benefits to the offline world, giving consumers the control and transparency of BNPL for all of their instore purchases.”

Klarna believes that its card is a better alternative to traditional credit means as it does not charge interest or late payment fees and will therefore be more consumer interest.

The launch comes at a time of growing regulatory concern surrounding the BNPL industry from the Financial Conduct Authority (FCA).

A similar story is playing out in the US, with the US Consumer Financial Protection Bureau has opened an investigation into popular BNPL solutions from companies including Afterpay, Affirm and PayPal.

Klarna spokesman Daniel Greaves said Britain’s FCA is “fully aware of the product and how it works,” and that the firm received the green light from regulators before launching.

.. keep expecting the Klarna bubble will shortly burst but I suppose if used responsibly and say ordering clothes for example to try on and send back it probably works well in that extent.

born_again

I wonder how the FCA will view this move. As they are already concerned by the "Buy Now Pay Later" surge with little or no affordability checks.

This just strikes me as another Pay Day loan bubble just waiting to burst.

jbrassy

adamp87 said:

Klarna has announced it is launching a physical card in the UK through Visa.

The card utilises the company’s buy now, pay later product and lets users defer payments on their purchases both in-store and online.

The card will initially only give owners the chance to “Pay in 30”, which allows customers the ability to delay paying the item until next month, however it plans to add additional payment options in the future.

In order to make money on each purchase, retailers which offer the payment solution are charged a small fee on each transaction.

Hasn't this type of service been around for years? Except most people call them credit cards?

PaulW922

born_again said:

I wonder how the FCA will view this move. As they are already concerned by the "Buy Now Pay Later" surge with little or no affordability checks.

This just strikes me as another Pay Day loan bubble just waiting to burst

It is not really anything like a pay day loan, as the borrower pays nothing to use the service. There is no interest charged - you just pay the bill within 30 days. I think the risk with BNPL is that it is so easy, people spend more than they can afford. However that is ultimately a problem with all consumer credit 

impoverishedtraveller

I wonder if dandtf has applied yet?

ferreroreeses

Very interesting business model. The fact that they charge the retailer fees rather than the consumer can only drive up consumption more, which is great for retailers because people will buy more stuff but will be interesting to see if people use this responsibly or not.

anotheruser

It's a shame this can't be advertised for what it is:

The business hoping people forget to pay so the company can charge large fees and make money.
Because that's what the business model really is.
Not exactly doing it out of the goodness of their hearts now are they

WillPS

anotheruser said:

It's a shame this can't be advertised for what it is:

The business hoping people forget to pay so the company can charge large fees and make money.
Because that's what the business model really is.
Not exactly doing it out of the goodness of their hearts now are they

The same could be said for many credit cards and personal banking products. How do you think banks make a profit from current accounts which they charge no fee for?

jimjames

jbrassy said:

adamp87 said:

Klarna has announced it is launching a physical card in the UK through Visa.

The card utilises the company’s buy now, pay later product and lets users defer payments on their purchases both in-store and online.

The card will initially only give owners the chance to “Pay in 30”, which allows customers the ability to delay paying the item until next month, however it plans to add additional payment options in the future.

In order to make money on each purchase, retailers which offer the payment solution are charged a small fee on each transaction.

Hasn't this type of service been around for years? Except most people call them credit cards?

Except this isn't a credit card so has no S75 protection and not regulated by CCA. A distinction many will not understand

WillPS

jimjames said:

jbrassy said:

adamp87 said:

Klarna has announced it is launching a physical card in the UK through Visa.

The card utilises the company’s buy now, pay later product and lets users defer payments on their purchases both in-store and online.

The card will initially only give owners the chance to “Pay in 30”, which allows customers the ability to delay paying the item until next month, however it plans to add additional payment options in the future.

In order to make money on each purchase, retailers which offer the payment solution are charged a small fee on each transaction.

Hasn't this type of service been around for years? Except most people call them credit cards?

Except this isn't a credit card so has no S75 protection and not regulated by CCA. A distinction many will not understand

What sort of Visa card will be issued then? Prepaid? Debit?

PRAISETHESUN

WillPS said:

jimjames said:

jbrassy said:

adamp87 said:

Klarna has announced it is launching a physical card in the UK through Visa.

The card utilises the company’s buy now, pay later product and lets users defer payments on their purchases both in-store and online.

The card will initially only give owners the chance to “Pay in 30”, which allows customers the ability to delay paying the item until next month, however it plans to add additional payment options in the future.

In order to make money on each purchase, retailers which offer the payment solution are charged a small fee on each transaction.

Hasn't this type of service been around for years? Except most people call them credit cards?

Except this isn't a credit card so has no S75 protection and not regulated by CCA. A distinction many will not understand

What sort of Visa card will be issued then? Prepaid? Debit?

It'll have to operate using some form of credit won't it, otherwise the whole BNPL aspect wouldn't work if users had to pre-load the card ahead of purchases?