Klarna vs Afterpay

Klarna vs Afterpay

Are you looking for the best buy now, pay later (BNPL) providers?

You might be stuck choosing between two big players in the game Klarna vs Afterpay.

Both offer customers similar installment-based financing plans to cover big expenses.

To learn which is the best option for you, it’s essential to dig deeper. We’re here to help you figure out how to weigh the pros and cons of these BNPL providers.

Ready to find out how one can beat the other? Read on!

Klarna and Afterpay: Key Features

Service and Availability

Klarna and Afterpay can be used for in-store, online, and in-app shopping.

Klarna is more widely available than Afterpay, which isn’t available in US Territories. Afterpay also has more eligibility requirements than Klarna.

Participating Retailers

Klarna is the clear winner when it comes to the number of options to shop at. It has more than 40,000 merchant partners across 45 countries. In contrast, Afterpay is accessible in 40 countries.

Klarna ranks higher on this aspect because it can also be used in locations where Visa is accepted.

Financing Plan

Klarna and Afterpay allow customers to make purchases and pay for them over time. On both platforms, 25% of the amount is due at purchase, and the rest must be repaid in four installments every two weeks.

Klarna also offers another financing plan that allows users to repay amounts in 30 days or finance installments for six months. Afterpay does not.

Interest and Additional Fees

Neither of these BNPL providers charges customers interest on timely installments or prepayments. However, some of Klarna’s long-term financing plans come with an interest charge between 0 and 24.99%.

Klarna charges users a $7 late fee, while Afterpay charges a minimum of $10. Afterpay’s late fee can go up to 25% of the purchase price or $68 (whichever is less).

Klarna also charges customers additional fees for certain payment methods and services. There are fees with Afterpay.

Minimum Purchase Limit

Klarna has a minimum purchase limit of $10, while Afterpay’s minimum limit is decided by its retailers.

The maximum limit for both BNPL services is determined based on your personal profile.

Extra Features

Klarna allows customers to create a one-time card number to make payments where Visa is accepted. This gives users access to more retailers that might not be in the Klarna ecosystem.

Additionally, Klarna rewards users for every purchase, such as redeemable discounts on future purchases.

Are Klarna and Afterpay Safe?

Klarna and Afterpay are both safe and legitimate BNPL services.

Safety is a big concern when it comes to financial data. And while most BNPL providers do have some kind of safety standards in place, it helps to know what level of protection you are receiving.

Klarna uses the Sofort GmbH payment form for its online payment systems. The system does not store your PIN or TAN. Third parties or Sofort GmbH employees do not have access to your information, either.

Afterpay works in compliance with PCI DSS Level 1 requirements. This means the company enforces the highest standards when storing, transmitting, and processing your data.

Does Klarna or Afterpay Help Your Credit?

Whether a BNPL service affects your credit score or not depends on many factors. Let’s take a look at them below.

Credit Check

Klarna and Afterpay both conduct soft credit checks when approving purchases. Soft credit checks do not impact your credit score and are not recorded on your credit report.

However, if you opt for the long-term financing plan from Klarna, you might be subject to a hard credit check. A hard credit check is recorded by credit bureaus and will show up on your credit report.

Activity Report

These BNPL providers do not report to credit bureaus when customers stick to their installment schedules. They do not report late payments unless the debt remains unpaid. For example, Afterpay gives customers a generous grace period to complete a defaulted payment.

Overall, neither Klarna nor Afterpay makes much of a difference on your credit score so long as you make payments on time.

Should I Use Afterpay or Klarna?

Use Klarna if…

  • You want to shop at locations that aren’t partnered with Afterpay
  • You want a widely accepted service provider
  • You won’t be making purchases below $10
  • You are sure you can make payments on time
  • You want long-term or flexible financing options

Use Afterpay if…

  • You want an easy and quick approval
  • You want an easy account setup
  • You want to make smaller purchases
  • You do not want to pay an additional fee for particular services or payment methods
  • You want to start building your credit
  • You have a troubled credit history
  • You might have to defer payments

The Bottom Line

If you compare the financing options, retail partners, and wide usage, then Klarna is the clear winner. But if you consider the approval process, credit history, and ability to defer payments, then Afterpay shines through.

It is hard to name one service the winner when the factors that differentiate them are so varied.

Our suggestion?

Take a close look at your own requirements and needs from a BNPL provider. Then choose one that accommodates your needs best. Since Klarna and Afterpay are so diverse in their offerings, we’re sure one of them will give you all that you need.

This is all you need to know about the Klarna vs Afterpay debate. The only question remains: which BNPL provider will you go for?

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