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 asked for products,” said David Fock, Klarna’s chief product and design officer, “and will allow people to pay in the Klarna way but with a card.”
By “Klarna way,” Fock means in installments. While the company’s offerings have evolved over the years, it started out as a buy now, pay later business, giving consumers a way to spread out payments over time.
Klarna launched a credit card in the EU several years ago but this will be the first time consumers in the U.S. can apply for one.
With the Klarna credit card, the company is now competing with the likes of Apple and more recently, Robinhood as well as rival BNPL player Affirm in offering a credit card in the United States. It is partnering with Salt Lake City–based WebBank in the effort. There is no annual fee for the card, and no foreign transaction fees.
Users can earn up to 10% cash back on selected merchants when using the card in its app, and the card integrates with the company’s AI assistant to find deals on planned purchases, he said. Klarna’s virtual Visa card is compatible with Google and Apple Pay.
For now, people can apply to be on a waitlist for the card, which will be rolling out in the coming months. Customers can pay for purchases either in stores or online. They will have the option after the fact to spread out the payments for a larger purchase across three to six months, with an interest rate ranging between 14.99% – 33.99%. Or, they can extend the due date by one month, also paying an interest in the range of 14.99% -33.99% on that purchase. While that interest rate isn’t unheard of for BNPL offerings (though it can be far lower), it is high compared to typical credit cards, which tend to be closer to 30% at the high end, according to Nerdwallet.
“We want to offer payment option flexibility but we don’t want it to be like a credit card that builds revolving credit for consumers,” Fock told TechCrunch. “We see it as a problem that the credit card debt in the U.S. is hitting record levels, and we believe our options are healthier and more sustainable.”
Affirm’s debit card also provides consumers with the flexibility to pay upfront or request to pay over time via the Affirm app. And Apple, too, gives the option to pay in installments (though Apple’s APR taps out at 29.49%). Where Affirm differs from BNPL cards issued by competitors is that Affirm underwrites transactions made using its debit card, according to Affirm’s head of product, Vishal Kapoor.
Like other credit cards, or other Klarna BNPL options, if users pay off their balances before they are due, they’ll avoid paying interest, Fock says. “Our customers are typically looking 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 earn interchange revenue as well as any interest collected.
The Stockholm-based company has seen success in expanding to the U.S., telling TechCrunch in February of 2023 that the country was its biggest market by revenue. (As of last November, that momentum had continued with Klarna saying it had over 37 million users in the country alone.) Today, Klarna said the U.S. and Germany represent its largest markets but that “the U.S. is gaining all the time and is often largest on a quarterly basis.”
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