PayPal has been around since the earliest days of ecommerce and is a well known, and trusted, online payment platform. Klarna is slightly newer to the game but is quickly becoming the biggest name in the ever-growing buy now, pay later (BNPL) industry.
With its recent launch of its ‘Pay in 3’ service, PayPal is now a direct player in the BNPL market, so how does it measure up against industry giant and Swedish fintech Klarna?
Klarna was founded in Sweden in 2005 and is currently the most downloaded BNPL app in the UK. It offers 3 different payment options:
PayPal Pay in 3 is PayPal’s buy now, pay later service that lets you split your online shopping basket into three interest-free manageable payments.
Popular retailers: Very.co.uk, LOOKFANTASTIC, PrettyLittleThing
Klarna offers 3 different payment options for consumers, one of which acts like traditional credit and charges interest.
PayPal Pay in 3 offers just 1 simple payment plan.
The winner: It’s a tie.
If you’re looking for multiple payment options then Klarna is the one for you. If it’s one clear, hassle free option then PayPal might be easier to keep track of.
One of the key considerations when comparing two payment services is the number of retailers where each payment method is accepted.
Klarna has one of the largest store directories of new BNPL providers with reportedly more than 4,262 UK stores and services.
As a much more established online payment service though, PayPal reports to be accepted by “millions” of stores worldwide.
Both proivders are growing their directories on an almost daily basis but it will take a while for Klarna to catch up with PayPal.
ASOS
Shop with Klarna at ASOS to buy now and pay later
Try before you buy when you choose the 'Pay later' option with Klarna at the ASOS checkout! T&Cs apply.
Lovehoney
Shop now, pay later with Klarna
Klarna payment is now available at Lovehoney. Buy now and pay in 3 today! T&Cs apply.
Iceland
£5 off £45 spend for new customers
New to Iceland? Use this discount code at the checkout to get £5 off your order of £45 or more! T&Cs apply.
boohoo
boohoo athleisure: 70% off
Keep comfy while looking cool with boohoo's athleisure collection now at 70% off. T&Cs apply.
The winner: PayPal.
Klarna charges no fees or interest for its instalment option or its “Pay 30 days later” option. Klarna also doesn’t charge any late fees, even if you miss a payment. However, if you select Klarna’s “Financing” option at the checkout, you may be charged interest (representative APR 18.9%, variable).
PayPal has typically always been free for consumers to use and there are no fees for choosing to pay with PayPal’s buy now, pay later scheme. As well as Klarna, the late payment fee is £0.
The winner: Klarna.
If you’re planning on using regular instalment or “Pay later” options rather than finance, Klarna will be better for you even if you miss a payment (although we don’t recommend you ever do!)
Whether Klarna is better than PayPal depends on what your situation is.
If you’re looking for multiple, flexible payment options at one of the retailers that is partnered with Klarna then it’s a great option for you.
If, on the other hand, you’re looking to split your online shopping total at a business that is not partnered with Klarna, you’ve got a good chance that PayPal will be able to offer you a solution.
Both Klarna and PayPal operate as businesses outside of the BNPL space (as a bank and an online payment system respectively), meaning both businesses can be trusted to handle your money and protect your payment details.
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