Online shoppers will now be able to buy now and pay later with ‘many more’ retailers after Klarna announced the launch of a new browser extension.
It means Britons will now be able to pay for their online shopping in interest-free instalments with any retailer, when purchasing from their desktop.
Previously this was only possible using the Klarna app, meaning those shopping on a computer desktop could only use the BNPL service if the retailer had signed up to be a Klarna partner.
Klarna has more than 250,000 retail partners, including H&M, IKEA, Samsung, ASOS and Nike
The Buy Now Pay Later (BNPL) provider’s acquisition of the discount code browser extension, Piggy, has enabled this new feature to become possible.
Its new browser extension will also give customers access to coupons and cashback offers across all online stores, even if the retailer is not a Klarna partner.
How does it work?
Piggy’s Google Chrome extension provided online shoppers with voucher codes and cashback at over 5,000 global stores. These were applied automatically upon checkout.
Now, under Klarna, it will give shoppers the added option of spreading purchases over a period of time rather than paying in one lump sum.
The Klarna browser extension also includes Klarna’s interest-free ‘Pay in 3’ feature, which works for 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.
Whenever a shopper makes a purchase or saves an item with the browser extension, it will also be reflected in their Klarna app.
Shoppers will not need a Klarna account in order to access some of the benefits of the extension, such as automatic coupons.
However, they will need a Klarna account to access features such as cashback, points, or Klarna’s payment options.
Power move from biggest BNPL player
This move by Klarna will likely act to reinforce its position as the biggest name in buy now, pay later.
The Swedish-owned firm is already the biggest player in the market, with more than 15 million customers spending £2.7billion a year in the UK.
Others include Clearpay, owned by Australian technology firm Afterpay, and British company Laybuy.
Andrew Hagger, founder of MoneyComms said: ‘The aggressive push to dominate the short term credit market by Klarna shows no signs of slowing up.
‘The browser extension will make BNPL an option at many more outlets and will no doubt drive more business for Klarna.’
Paying later more popular than ever
Klarna’s new feature will continue to normalise the BNPL payment method among UK shoppers.
A rising number of Britons used BNPL schemes during the pandemic as they turned to online shopping during successive lockdowns.
As a result, spending made through such payment methods more than tripled between January and December last year.
A record 28 per cent of Britons made at least one BNPL repayment in October this year according to Equifax, up from 23 per cent in December 2020.
Equifax’s research also found that more than one in 10 shoppers expected to use BNPL over the festive period.
Klarna is one of the most highly-valued private fintechs globally with a $45.6 billion valuation
Klarna’s new feature could see BNPL adoption become even more widespread.
With its 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 predominantly shop via their computer.
Desktop shopping accounts for 32 per cent of all ecommerce traffic and 44 per cent of all online orders in the UK, according to analysis by behavioural marketing firm SaleCycle.
Klarna’s browser extension will cater to this demand by providing online shoppers a similar experience on their desktop to what is already possible via the Klarna app.
David Fock, chief product officer at Klarna said: ‘While mobile shopping is surging, we also see that many consumers still enjoy the comfort of browsing and comparing items on a larger desktop screen.
‘With the introduction of our browser extension, consumers shopping on their desktop can now benefit from the convenience, control and flexibility of Klarna’s ‘Pay Later’ services at all of their favourite online stores.
‘Combined with the automatic couponing and cash back features, our new extension offers the ultimate shopping hack, saving time and money for consumers at every checkout.’
BNPL debt risk still a concern this Christmas
There are concerns that BNPL shoppers are at increased risk of spending beyond their means, which could result in financial difficulties in the future.
Klarna stresses that those who use its service will not compromise their credit score provided they meet their payments.
However, as many as one in ten BNPL customers have been chased by debt collectors after missing payments, according to Citizens Advice.
The charity’s research suggests shoppers have been charged as much as £39million in late fees over the past year.
Klarna currently charges no interest or late payment fees for its Pay in 30 days and Pay in 3 instalment products
Desktop shopping still accounts for 32 per cent of all e-commerce traffic
But for those requiring longer-term financing for big-ticket items, who may need to spread the cost from 6-36 months, this sometimes carries an interest charge up to 18.9 per cent.
It recently emerged that Klarna’s losses are soaring due to a sharp rise in customers being unable to repay their loans.
Providers including Clearpay and Laybuy, have hit customers with a £6 charge if they are just 24 hours late with their payments – then levied another £6 fee if the overdue payment was not made within the next seven days.
Klarna withdrew its £12 penalty fee on its financing product earlier this year, but concerns still remain over the potential debt spiral shoppers can fall into.
Some personal finance experts are concerned that BNPL schemes can encourage some people to spiral into debt
‘BNPL can help people budget when money is tight, but there’s a danger that people who use this option frequently could lose track of their spending and build up a level of debt that becomes difficult to manage,’ warned Hagger.
‘If anyone uses BNPL they need to keep a running total of what they owe and when payments are due.
‘Failure to do so could result in financial pain and in some cases, hefty missed payment penalties.’
Klarna, however, claims it does perform the relevant checks on its customers to verify they can keep up with repayments.
A Klarna spokesperson said: ‘Unlike credit cards that automatically set high credit limits, we continuously check our customers’ ability to pay on each transaction, including with credit checks – if they can’t then we don’t let them buy more.
‘We’ll restrict our services if there’s missed payments to prevent debt building up because we make no money from consumer fees and interest.’
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