Klarna is launching 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, Klarna’s chief product officer, “and will allow people to pay the Klarna way but with a card.”
By “Klarna way”, Fock means installments. Although the company’s offerings have evolved over the years, it started with buy now, pay later, giving consumers a way to spread out their payments over time.
Klarna launched a credit card in the EU several years ago, but this will be the first time U.S. consumers will be able to apply for one.
With the Klarna credit card, the company now competes with companies like Apple and more recently, Robin Hood as well as rival BNPL player Affirm by offering a credit card in the United States. In this context, it is partnering with WebBank based in Salt Lake City. There are no annual fees for the card or foreign transaction fees.
Users can earn up to 10% cash back at select merchants when they use the card in its app and the card integrates with the company’s AI assistant to find deals on planned purchases, a he declared. The Klarna Virtual Visa Card is compatible with Google and Apple Pay.
For now, people can apply to join a waiting list for the card, which will be rolled out in the coming months. Customers can pay for their purchases either in store or online. They will subsequently have the option of spreading payments for a larger purchase over 3 to 6 months, with an interest rate of 33.9%. They can also extend the due date by one month, also paying 33.9% on that purchase. While this interest rate is not unheard of for BNPL offerings (although it can be much lower), it is high compared to traditional credit cards, which tend to be closer to 30% at the high end. of range, according to Nerdwallet.
“We want to provide flexibility around payment options, but we don’t want it to feel 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 United States is at record levels, and we believe our options are healthier and more sustainable.”
Affirm’s debit card also offers consumers the option to pay up front or request an installment payment through the Affirm app. And Apple also offers the option to pay in installments (although Apple’s APR is 29.49%). Where Affirm differs from BNPL cards issued by its competitors is that Affirm guarantees transactions made using its debit card, according to Vishal Kapoor, Affirm’s head of product.
Like other credit cards or other Klarna BNPL options, if users pay off their balance before it is due, they will avoid paying interest, Fock said. “Our customers generally look for the free option,” he said. “We really want this to be an extension of how customers are used to using Klarna.”
Naturally, Klarna will receive interchange revenue as well as any interest earned.
The Stockholm-based company has had success expanding into the United States, telling TechCrunch in February 2023 that the country is its home. the largest market in terms of turnover. (Last November, this momentum continued, with Klarna claiming to have more than 37 million users in the country alone). Today, Klarna said the U.S. and Germany represent its largest markets, but that “the U.S. wins consistently and is often the largest on a quarterly basis.”
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