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Afterpay Vs Klarna: A Detailed Comparison

Afterpay Vs Klarna: A Detailed Comparison

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Both merchants and consumers love Afterpay! A merchant said they saw a sales boost immediately after incorporating this into their business. Its setup is easy, and managing it is even easier. Customers find support seamless to reach!

Meanwhile, Forbes reviewed Klarna this year and has written a comprehensive review about this app. They included points on the type of consumers that is compatible with Klarna:

  • Consumers that pay for their purchases within four to six weeks
  • Consumers who need to purchase but are not in a position to pay in cash
  • Does not want to pay interest
  • Not sensitive about their credit
  • Have challenges with their credit score

In this article, we will learn more about both software, their similarities and differences, and what makes them worth comparison. You can expect to read how both BNPL services work, their pros and cons, and what makes Afterpay and Klarna apps different.

What is Afterpay?

Woman cuddling baby and using laptop

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Afterpay is an excellent interest-free option for buy now pay later or BNPL. It does not demand credit bureaus to do a check on you credit history, and you can pay your dues by using a credit or debit card. Afterpay proposes four interest-free payments with no interest fees. They will not collect any fees as long as you pay on time.

It is easy as 1,2,3! Choose one of the stores in the Shop Directory, then select Afterpay as your payment method upon checking out. You need to have an account (do not fret because it will take a short time to create a new account as this is instantly approved, and they will not run anything on your credit report).

Most services will include free shipping by merchants but better check any current promos and deals via the merchant's website or their physical store. Your orders would be shipped to you via drop shipping if you ordered this through an online app which means the supplier and merchant will directly

Afterpay may not approve all items since they promote liability in spending. How does this happen? They consider several aspects, such as a long-time customer who had ordered and had no issues paying on time will tend to have more approved items and more possibility of spending more. 

What Is In It For You When You Use Afterpay

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Merchants and consumers of Afterpay observe notably many benefits.

Payments: customers usually pay the first payment upon placing the order using Afterpay. Suppose you have been shopping with an excellent payment record; Afterpay can be very lenient in asking you for the initial payment two weeks into making the purchase. (For those in California, it can be up to 15 days). Customers will also receive a communication stating the dates and amounts of installment payments.

You will notice that some product purchases may have a higher first installment; this happens if you have reached or your total amount is higher than your regular spending limit; the initial payment could increase compared to your other expenses. But the good thing about this is Afterpay informs you of the allocation of charges before you need to make them.

You can also purchase gift cards with Afterpay.

Integration. Another benefit of Afterpay is its availability when you go shopping online. It is the most convenient to use because the steps are straightforward. You will see the option to pay Afterpay in the checkout section, and you can make your first payment out of your four installments.

There are no credit checks or no impact on your credit rating. Ensure a good record of how you make your payments, and guarantee that you will not see any effect on your credit score.

Interest-free. The main reason consumers go with buy now pay later services is that they would like to purchase the products they need and want without the fear of digging themselves into a more challenging situation of repaying what is owed and adding different fees, including interest. The excellent news is Afterpay has zero interest and focuses on paying off the four installments for fortnights.

While we're providing you with a detailed comparison of ‘Afterpay Vs Klarna,' if you're specifically interested in Target's acceptance of Afterpay, don't miss our article on ‘Does Target Take Afterpay?‘ Click here to learn more about Target's payment options.

Looking at the Drawbacks of Using Afterpay

man in black zip up jacket sitting on chair

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Cannot change payment dates. There are benefits, but several drawbacks to Afterpay, as well. One is you will need help choosing your payment dates. If the dates do not coincide with the dates you get your pay, this could be a late challenge. This could mean late fees.

You may go beyond your shopping budget. Since it is a BNPL service, there is a higher temptation to go beyond your shopping budget. Admit it, if you can buy now what you have wanted to have and you are allowed to pay later, it is so much harder to control yourself, especially if you love shopping.

Afterpay+credit card = not so perfect combination. Yes, Afterpay is indeed interest-free, but you cannot avoid still paying other fees when it comes to your credit card since no one wants to have credit card debt.

There are still late payment fees. Afterlife is interest-free, but late fees are another topic. If you miss your payments, you can face additional fees for as much as 25% of the item price. This will be fine if you are confident that you can pay off on time, but if you think this will be an issue and there will be delinquent payments on your part, then you may want to consider if you want to take advantage of BNPL services so you will not pay any late fee.

What is Klarna?

Use Klarna BNPL service for online shopping

Source: pexels.com

Klarna is another buy now pay later (BNPL service) both for in-store and online shopping available in most of the biggest names of retailers.

It is similar to Afterpay, and we will discuss its similarities and differences later in this article. But Klarna also provides installment loans with no interest rate upon checkout.

Some would say to pay upfront, even for pay-later services, because it makes everything more accessible and more practical to pay smaller in your remaining payments.

It would help if you were at least 18 years old to qualify for Klarma. You must also have a bank account or bank card with good credit history. Klarma sends you a verification code through an SMS if you are qualified.

Looking at the Benefits of using Klarna

Like most BNPL services, Klarna also aims to promote sensible spending habits to its customers. Hence, Klarna does not automatically approve all ordered products; they decline, too, but assist customers with available services.

With more than 450,000 retailers using Klarna all over the place, it is easier for customers to apply for and acquire virtual cards. They also offer another option for longer loans (e.g., car loans), so its customers can manage their budget if they cannot repay this in four payments.

Like most pay-later services, Klarna does not charge interest for pay in four equal payments.

Klarna also offers several methods to fund purchases

They also assist customers in setting up virtual card numbers including for merchants

Has the feature of setting up notifications on customer-saved items so they can be alerted if prices are updated

The Challenges of Using Klarna

The perennial question is whether BNPL is supposed to smooth transactions, but you may ask at what cost? Klarna, one of the largest banks in Europe, allows people to the buy now pay later service, but they still require a soft credit check.

Companies run a soft credit check when they run a background check to assess risk.

Klarna may or may not report your account if you have subsequently missed payments. There is no interest, but they charge late fees.

At this time Klarna does not support the purchase of gift cards. This also applies to Klarna single time cards. Any gift card purchase attempt will be automatically declined. This is a safety measure to prevent fraudulent, untracable transactions. 

Comparison of Afterpay and Klarna

Two women comparing Afterpay and Klarna

Source: pexels.com

Learning From Two of the Best: Afterpay and Klarna

One can conclude at a glance that Afterpay and Klarna are almost pretty much the same. They are two of the prevalent buy now pay later software/apps, and you will see that they both have the following:

  • Zero interest
  • 25% repayment terms every two weeks
  • Available in the biggest stores everywhere you go
  • Both allow you to shop via the mobile app on iOS or Android phones.

Appreciating the Contract Between Afterpay and Klarna

Fees and interest rates

There are also differences between Afterpay vs Klarna as much as they share so many things in common.

Interest fees. Afterpay has no interest charges, while Klarna sometimes charges interest or more of repayment fee depending on the financing method customers select.

You may pay Klarna on a monthly installment, which will incur legal interest, but they also have a fee structure if you choose their planned payment plan.

Availability of services

Afterpay is well-known to have originated in Sydney, Australia but is now available in the US, UK, New Zealand, Canada, and the EU, where Afterpay is also known as Clearpay.

Meanwhile, Klarna originated in Stockholm, Sweden, and is now available in Norway, Finland, Denmark, Germany, Austria, the Netherlands, Belgium, Switzerland, Great Britain, and the USA. Both continue to grow in terms of their scope of service.

How are the of User Experiences of Both Services?

User interface and ease of use

  • Afterpay 18 unique features are still growing, and customers are obviously
  • finding it easy to use the app because but not limited to the following features:
  • ACH Payment Processing
  • Credit Card Processing
  • Data Security
  • Debit/Credit Card Processing
  • Electronic Payments
  • Fraud Detection
  • Mobile Access
  • Mobile Payments
  • Online Payments
  • Partial Payments
  • Payment Fraud Prevention
  • Payment Processing
  • Recurring/Subscription Billing
  • Reporting & Statistics
  • Reporting/Analytics
  • Self Service Portal
  • Third-Party Integrations
  • Transaction History
  • On the other hand, users of Klarna app enjoy the aesthetics side and with equal exciting features:
  • Competitive yet easy to use payment integration
  • Well-thought checkout integration
  • They allow you to customize the page look
  • Klarna also constantly protects its customers' identities to avoid fraudulent activity. This way, customers feel safer since they know they use a secure purchase process.
  • Subscription billing is also easy with Klarna. They have a unique token feature created during your initial purchase representing the customer and what they purchased. They can use this to start any succeeding purchases with Klarna payments

Customer support and dispute resolution

  • Afterpay and Klarna have clear policies in terms of their dispute process. With Afterpay app:
  • The mobile app will allow customers to raise a dispute if they do not receive their purchases and would like to refund or return the items.
  • Customers must contact the merchant directly if they need help with a delayed delivery or missing deliveries. For returns, this will always be based on the merchant's return or refund policy. Once this is approved, customers can view their refunds in your payment schedule.

Meantime, with Klarna:

  • Klarna has also harnessed how to handle disputes and returns of its customers properly.
  • The reasons include but are not limited to the following:
  • The purchased item was not received
  • Damaged or defective items
  • Unauthorized purchases
  • Returns
  • Invoice is incorrect

Like with Afterpay, customers are encouraged to report this to the merchants as soon as possible. Once the issue is raised to Klarna, merchants have 21 days to resolve the problem unless this is a fraud, as reported by the customer. Customers can see the updates in the app from the moment the customer has raised the claim or dispute.

Where is Klarna Accepted?

There are a ton of brands all over the world that let you use Klarna on their website or app. Here are our ten of our absolute favorites—and which payment plan we recommend based on the type of item.  Want to know what your Klarna purchase power value is? Find out more in this handy guide. 

Adidas

Keep yourself on track by paying for your running shoes in four installments.

Adidas has been making top-quality sports gear since 1949.

Alternative Airlines

Book flights to anywhere in the world, with over 600 airlines.

Bloomingdales

Treat yourself to a splurge—but responsibly, by spreading the cost out over four payments.

At Bloomingdales, you can find anything from jewelry and handbags to luggage and strollers.

Etsy

Etsy is your one-stop-shop for all things vintage and handmade.

If you’re not sure that the one-of-a-kind item you’ve been eyeing is right for you, order and pay in 30 days.

Journey Bikes

Get an e-bike for your next adventure. You can pay in four installments to spread out the cost.

Lilysilk

Silk Shirts, Pajamas, Bedding and More!

Lululemon

If you’re not sure what size you are, order that yoga top in two and pay in 30 days.

Overstock

Redoing a room? Finance your home decor, furnishings, and art so that you can bring your vision to life right away.

Pandora

If you’re buying jewelry for someone special, choose the pay in 30 days option.

That way, you can always return if it turns out they prefer hoops to studs.

Rimowa

Pay in four for this high-quality luggage, which will not only protect your things but also ensure you make an impression wherever you go.

Saatva

You can make a finance plan to buy the supportive mattress of your dreams.

Saatva’s mattresses are hand-crafted and eco-friendly.

Sonos

You can pay for your speakers in four installments while still enjoying your music in every room.

Afterpay vs Klarna: Reasons for Using (Or Not Using)

Woman and man discussing pros and cons of Afterpay and Klarna

Source: pexels.com

Afterpay Pros: there are no charged interest rates, easy setup on the Afterpay app, many options in choosing the shop, and no impact on credit score or rating (as long as you maintain responsible spending and payments)

Afterpay Cons: Not a good combination with a credit card, can encourage shopping addiction

Pros of Klarna: No annual fees, no membership fee, and different finance options customers can choose from

Cons of Klarna: Late fees, returned fees (fees vary), and some longer financing terms will require customers to go through a hard credit check.

Afterpay vs Klarna: Is It Worth Trying

Family doing shopping in the grocery store using buy now pay later service

Source: pexels.com

Finally, we have reached the end of this article, and we hope you now have a gist of what Afterpay and Klarna are. We somehow read their similarities and differences to give you a better idea of what works for each customer better.

What we recommend to readers is if you think you really need a buy now pay later service, go through the pros and cons and the availability of the service in your area and their participating retailers, and see how they handle payments or installment payments. We can only hope Afterpay and Klarna will continue to prosper and move forward with their customers as the top-notch reason why any improvement to their business is needed.

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