Friday 31 January 2020
Hey AfterPay and Zip! It’s time to move over, because there’s a new kid in town, and it’s got a bit of an international rep.
Yesterday, Klarna - the latest Buy Now Pay Later service provider to hit Aussie shores - launched with one of the big four, CommBank.
It has been announced that the major bank has invested an additional US$200 million in the European fintech, on top of its initial US$100 million investment last year.
Originally founded in Sweden, the platform has been operating for 14 years all over the world - in places like the UK, USA and Europe.
CBA Chief Executive Officer, Matt Comyn, said that the partnership addresses the increasing demand for alternative payment options in Australia while also enhancing customer experience within their award-winning app.
“[Our partnership] allows us to build on our leading technology to deliver the very best payment services for our customers and merchants in Australia, on platforms which are safe, secure, and easy to use,” Comyn said.
“By partnering with Klarna, we are bringing together our market leading digital technology, merchant relationships and strong customer network with Klarna’s innovative payments technology and integrated shopping experience for the benefit of CBA customers and many more Australian consumers.”
Last year, Mozo’s experts gave the CommBank app not one, but two, 2019 Mozo Experts Choice Awards in the Excellent Banking App and Pocket Money Mobile App categories.
In Australia, Klarna is a new Buy Now Pay Later (BNPL) service provider that has teamed up with CommBank.
Like other BNPL products, Klarna provides a four interest-free installment payment model for online purchases, however you can not use it in store - it’s designed for online purchases.
Users can access Klarna through either the CommBank or Klarna app, which then connects you through to a whole bunch of online stores. Plus, for stores that aren’t already listed on the app, you can simply type in the name of the store or its website’s URL and Klarna will do the search and connect itself as a payment option for you.
The company boasts that you can use it at any online retailer, regardless of whether it’s listed on the app or not.
Plus, Klarna keeps customers in the loop with promotions and sales that stores are having, and it allows you to create a ‘wishlist’ of items you want to buy and opt to receive price drop alerts when they go on sale.
At the moment, when you shop online through Klarna, you are given the option ‘pay with Klarna’ at the checkout, where you must create a ghost card that acts as your payment option.
What’s a ‘ghost card’?
Well, when you find an item that you want to buy, Klarna will provide you with a ghost card to buy that product, where you enter the amount you want to spend. Then, they approve the amount you requested to make your purchase, you buy the item and then you pay it off in 4 instalments.
Just bear in mind, there is a maximum limit of $1,000 for these ghost cards - so it may not be suited for higher valued items. Plus, these cards are for one-time use, if you need to purchase something else from another store, you must create a new ghost card.
No you don't.
While CommBank has invested in Klarna, non-CommBank customers can also use the platform. It’s just a matter of jumping over to the app store, downloading the app and providing your card details from whichever bank you use!
The sign up process for Klarna is free and there is no interest on your scheduled repayments, however if you miss any payment dates - you could face fees.
Customers are give a ‘courtesy period’ of two to seven days to make their repayment without penalty, after that they will be subject to the following costs:
The way you sign up for Klarna differs a little depending on whether you are a CommBank customer or not. So to make things a little easier, here’s a step-by-step breakdown of how to do it.
RELATED ARTICLE: Could banks adopting Buy Now Pay Later mean the end of credit cards?
Want to check out what else is happening in the world of fintech? Jump over to our fintech hub for all the updates on Buy Now Pay Later, banking apps, digital payments options and more!