Europe’s most valuable fintech startup Klarna launches credit card in the UK to take on banks and credit card firms

Fintech startup Klarna is taking on banks and credit card firms with the launch of its first physical card in the UK. The new credit card will enable customers to use its “buy now, pay later” service online as well as in high street stores.

Unlike the regular credit cards, Klarna said the card will allow for payment on purchases to be delayed for up to 30 days, with no interest charged on the balance or fees levied for late payment when used at high street shops. The new credit card is offered to customers in addition to Klarna’s buy-now-pay-later (BNPL) products for UK customers.

The “Buy now, pay later” giant also confirmed it had built up a waitlist of 400,000 consumers in the UK, which it claimed showed “strong demand for a new approach to credit,” following a successful launch in Germany and Sweden. Over time, Klarna said it plans to add more of its payment options, including splitting purchases into three monthly payments.

Klarna also added that the new card would give consumers the flexibility to pay for purchases at a later date “without the inherent risks of interest and revolving credit.”

In a statement, Alex Marsh, head of Klarna UK, said: “Consumers are rejecting credit products that charge double-digit interest rates while allowing repayments to be put off indefinitely. For online purchases where credit makes sense, buy now, pay later has become the sustainable alternative, with no interest [charged] and clear payment schedules.”

Marsh added: “The launch of Klarna Card in the UK brings those benefits to the offline world.”

Klarna was founded in 2005 in Stockholm, Sweden with the aim of making it easier for people to shop online. In the last 12 years, technology has evolved, excited, and transformed the world around us, yet their mission remains as relevant as ever, to make paying as simple, safe, and above all, smooth as possible.

Klarna’s direct-to-consumer app, which enables users to shop at any store or brand online with installment payment options, is strongly resonating as consumers have become more focused on convenience, value, and control. The app has more than 12 million monthly active users worldwide, with 55,000 daily downloads, significantly outpacing its nearest competitor with almost 3x as many downloads over the last year.

Meanwhile, Klarna’s products are not currently regulated by the British watchdog the Financial Conduct Authority (FCA). This means consumers cannot complain to the Financial Ombudsman Service when things go wrong.

David Beard, of Lending Expert, said: “It’s a bit worrying that this card has launched because it is not regulated by the Financial Conduct Authority, which means shoppers who opt to use the card will be missing vital consumer protection. It’s important to innovate with the ways we pay, but it’s more of a priority to protect the most vulnerable in society from getting themselves into unaffordable debts.

“The FCA ensures providers are transparent, fair, and don’t mislead consumers. Without answering to them, I can’t feel assured that Klarna will do enough to adequately explain the terms and conditions of the card.”