Online shoppers will now be able to buy and pay later with “multiple retailers” after Klarna announced the launch of a new browser extension.
This means Britons will now be able to pay for their online shopping in interest-free installments with any retailer, when buying from their desktop.
Previously this was only possible using the Klarna app, meaning those who shop on a computer desktop can only use the BNPL service if the retailer has signed up to be a Klarna partner.
Klarna has more than 250,000 retail partners, including H&M, IKEA, Samsung, ASOS and Nike.
Buy Now Pay Later (BNPL) provider Buy Now Pay Later’s acquisition of the discount code browser extension, Piggy, has made this new feature possible.
The new browser extension will allow customers to access coupons and cashback offers across all online stores, even if the retailer is not a Klarna partner.
How it works?
Piggy’s Google Chrome extension has offered online shoppers coupon codes and cashback at more than 5,000 global stores. These were applied automatically upon checkout.
Now, under Klarna, it will give shoppers an additional option to spread out purchases over a period of time instead of paying all at once.
The Klarna browser extension also includes Klarna’s interest-free “Pay in 3” feature, which works with any online store that accepts Visa card payments.
It is compatible with Google Chrome and Microsoft Edge, but is not yet available via Firefox and Safari.
When a shopper makes a purchase or saves an item with the browser extension, it will also be reflected in their Klarna app.
Shoppers won’t need a Klarna account in order to access some of the extension’s benefits, like automatic coupons.
However, they will need a Klarna account to access features such as cashback, points, or Klarna payment options.
Power move from the biggest player in the BNPL
The move by Klarna is likely to cement its position as the biggest name in buy now, pay later.
The Swedish owned company is already the biggest player in the market, with more than 15 million customers spending £2.7 billion annually in the UK.
Others include Clearpay, owned by Australian technology company Afterpay, and British company Laybuy.
Andrew Hager, founder of MoneyComms, said: “The aggressive push to dominate the short-term credit market by Klarna shows no signs of slowing.
“The browser extension will make BNPL a choice in many niches and will undoubtedly increase business for Klarna.”
Pay later is more popular than ever
Klarna’s new feature will continue to normalize the BNPL payment method among UK shoppers.
An increasing number of Britons have used BNPL schemes during the pandemic as they have turned to online shopping during successive lockdowns.
As a result, spending through these payment methods more than tripled between January and December last year.
28 per cent of Britons registered at least one BNPL payment in October this year according to Equifax, up from 23 per cent in December 2020.
Equifax research also found that more than 1 in 10 shoppers expect to use BNPL over the festive period.
Klarna is one of the most valuable private financial technology companies globally, with a value of $45.6 billion
Klarna’s new feature could lead to widespread adoption of BNPL.
With the mobile app already downloaded by more than five million people in the UK and over 44 million globally, this new feature is aimed at those who shop mostly from their computers.
Desktop shopping accounts for 32 per cent of all e-commerce traffic and 44 per cent of all online orders in the UK, according to an analysis by behavioral marketing firm SaleCycle.
The Klarna browser extension will meet this demand by providing online shoppers with a similar experience on their desktop to what is already possible via the Klarna app.
David Fock, Chief Product Officer, Klarna, said: “While mobile shopping is on the rise, we also see that many consumers still enjoy the convenience of browsing and comparing items on a larger desktop screen.
With the introduction of our browser extension, consumers who shop on their desktop can now take advantage of the convenience, control and flexibility of Klarna’s ‘pay later’ services across all of their favorite online stores.
“Along with automatic coupon and cashback features, our new addition offers the best ways to shop, saving consumers time and money at every checkout.”
BNPL debt risk remains a concern this Christmas
There are concerns that BNPL shoppers are increasingly at risk of spending beyond their means, which could lead to financial hardship in the future.
Klarna assures that those who use its service will not harm their credit score provided they meet their payments.
However, up to one in ten BNPL customers have been pursued by debt collectors after missing payments, according to Citizens Advice.
The charity’s research suggests shoppers have paid £39m in late fees over the past year.
Klarna currently charges no interest or late payment fees for paying within 30 days and paying in 3 installment products
Desktop shopping still accounts for 32 percent of all e-commerce traffic
But for those who need long-term financing for expensive items, who may need to spread the cost from 6 to 36 months, this sometimes carries interest charges of up to 18.9 percent.
It has recently emerged that Klarna’s losses are on the rise due to the sharp rise in the inability of customers to repay their loans.
Providers including Clearpay and Laybuy have hit customers with a £6 fee if they are just 24 hours late with their payments – and then charge another £6 if the late payment is not made within the next seven days.
Klarna withdrew the £12 penalty fee on its financing product earlier this year, but there are still concerns about shoppers potentially being caught in a debt spiral.
Some personal finance experts worry that BNPL schemes could encourage some people to go into debt
“BNPL can help people budget when money is tight, but there is a risk that people who use this option frequently may lose track of their spending and become difficult to manage,” Hager warned.
If anyone is using BNPL they should keep a running total of what they owe and when they are due to be paid.
“Failure to do so can result in financial hardship and in some cases, loss of repayment fines.”
However, Klarna claims that it does the relevant checks on its customers to verify that they can keep up with reimbursements.
A Klarna spokesperson said: ‘Unlike credit cards which automatically set high credit limits, we continually check our customers’ ability to pay for every transaction, including credit checks – if they can’t, we don’t allow them to buy more.
“We will restrict our services if there are missed payments to prevent debt buildup because we don’t make money from consumer fees and interest.”
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