Klarna: Pay and Sell

Review posted Tue 11 Oct '11
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This Scandinavian business is set to grow significantly with some serious financial backing and is looking to spread its new method of paying for goods online worldwide.

Historically shopping online has meant parting with the cash before receiving your goods and there are many reasons for this. For a start the whole process is geared to the speed of transaction meaning ecommerce businesses haven’t got the time, resources or inclination to investigate customer’s and sell on credit terms. If your credit card is declined you don’t get the goods.

The Klarna offering has been marketed to float the boat of both seller and buyer. For buyers the advantage is clear in that they can see and feel their goods before paying. For sellers the message is do it this way and your sales will increase.

So what is it? For some people the mechanics will appear to mirror a credit card purchase in some respects. Anyone checking-out on a participating online store gets the option to go through the normal channels or use Klarna. Opt for the second and you get two choices, invoice or account.

If you choose invoice then Klarna simply credit checks you and approve or decline the purchase. If it’s approved they’ll pay the seller and invoice you at the end of the month. The account option works in the same way however it gives buyers the option to pay the amount off in instalments, a little like a credit card.

There are other perceived benefits for online buyers which include dispensing with the need to constantly enter sensitive information. On top of that all purchases made via Klarna throughout a month will be conveniently listed on one invoice.

What’s not easy to find amongst the marketing blurb is how much it costs but it’s probably not that difficult to imagine. Ecommerce businesses are effectively getting a merchant service with the associated costs of that and of course buyers are obtaining credit and we all know that’s not free.

I have asked the questions and if Klarna do have an innovative method of charging you’ll be the first to know.

Conclusion
This is an interesting one to watch as it’s taken off big time in its home territory. Payment behaviour does differ across the globe however and so some people might not have such a problem with the online shopping experience staying as it is.


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