In our first blog post in our new series on Buy Now Pay Later (BNpL), we discussed the phenomenal growth of this payment method and the value it can bring to businesses. Because it's so appealing to digital natives, e-commerce merchants can hardly ignore BNpL's potential role in boosting sales.
Of course, there are now a range of suppliers and it doesn't make sense to integrate each one, so businesses need to understand the nuances of each one before choosing which one to offer.
In the next blog post, we will discuss some of the leading providers of BNpL services. Credit card usage is expected to decline by 31% over the next three years, while BNpL usage will increase by 39%. Therefore, it is very important to determine which supplier is the most suitable.
We'll start with one of the first big winners in the BNpL space. Klarna.
Founded in Sweden in 2005, Klarna has experienced explosive growth and is a leader in the BNpL space. In 2020, it grew 46% to $53 billion in total merchandise volume. In addition, it now processes about 2 million transactions per day and supports 90 million shoppers through 250,000 businesses in 17 countries, including 78,000 retailers and in-store live streaming.
Klarna boosts the retailer's new customer acquisition performance, achieving 360 million monthly impressions and 50 million annual clicks globally. The Klarna app is installed 32 million times globally, with an average of 18 million monthly users. Klarna is also a fully licensed bank. After several quick funding rounds from big investors, it recently reached a valuation of $31 billion.
Klarna has developed three options for shoppers for flexibility, purchasing power and control over Klarna payment gateway. For small to mid-sized purchases, Klarna offers a "three instalment" option in the EU and a "four instalment" option in the US and Australia, where customers can share the cost of the order. They also offer a direct "pay later" option where shoppers can pay within 14 or 30 days. If they pay within 30 days, there is no fee or interest to pay.
There is also a financing option where customers apply in the app or online and get an instant credit decision before completing a purchase. This is more of a traditional credit arrangement (customers can pay in instalments over 6-36 months, with or without interest).
The third option, called Pay Now, allows shoppers to simply pay in full at the time of purchase.
Klarna's payment methods feature buyer protection, automated booking payments and reminders to put customer experience first. Klarna is the only provider that doesn't charge overdue fees to the popular "three instalments" payment method.
The service is available in many European countries, including the UK, Germany, Netherlands, Switzerland, Belgium, Sweden, Austria, Norway, Finland, Denmark, Spain, Italy and France. In addition to Europe, it is active in the US, Canada and Australia, and will launch in New Zealand, Portugal and Ireland.
The Klarna card is immediately usable with Google Pay after successful sign-up, so customers can get started right away without having to wait for the physical card to arrive.
When compared to PayPal, Klarna offers support for retailers. In contrast to PayPal, you can use your Klarna account to make purchases at any merchant that accepts credit cards.
The vendor gives Klarna a tiny portion of each sale as payment. In return, Klarna accepts the financial risk of providing customers with immediate financing. And do not fret. Even if clients are slow to pay, the merchant is still immediately reimbursed.
- Aug 17,2023
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