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Finance Digital

Klarna: the digital finance revolution

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June 4, 2021 | 3 min read

Want to leverage the digital finance revolution for your e-commerce strategy? Then you need to know about Klarna

Klarna is paving the way as an alternative digital credit provider for consumers. It’s the most popular buy now pay later (BNPL) provider with over 14 million users in 2020. You can find it on large e-commerce sites like ASOS and high end equipment retailers like Peloton. Alongside the likes of Paypal, Klarna is becoming a staple offering you see at a check out.

The rise of Klarna comes primarily because of the flexibility it offers to consumers and retailers. There are different options on how to pay for products through the BNPL service:

In full within 30 daysSplit the cost evenly over 3 monthsFull finance option for 6-36 months

So why are consumers turning to Klarna?

Flexible financial management

During the pandemic, spending patterns shifted due to financial instability. The uncertainty faced by many through furlough, redundancies and changing work environments disrupted normal spending. With Klarna’s range of options, it enabled people to still make necessary investments without huge outgoings all at once. The most popular sector for Klarna purchases was technology during 2020 followed by fashion, home and garden purchases.

No interest rate payments

BNPL is fast becoming a common replacement for the traditional credit card. With no interest rates and more options for repayments – it’s a no brainer in the digital sphere. In 2020, 3.6% of all online purchases were made using BNPL services, coming to a total of £4.1 billion. If these purchases were facilitated by traditional credit cards then the estimated interest rate calculation is up to £76 million!

Non-financial benefits

The biggest difference between Klarna and traditional credit providers is the flexible returns policy. When brick and mortar stores were forced to close, online shopping became the only way to buy non-essential items. It can be difficult to shop online for clothes, you don’t know what the fit will be like. The benefit to using Klarna is you can order as much as you like without the money ever leaving your account – as long as you send back what you don’t need!

With an easy integration onto your e-commerce site and a range of tools to help you market Klarna, it’s a no brainer for any retailer who wants to compete in the digital space. The trend in BNPL is growing so not giving consumers the option could result in a loss of sales.

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