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
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| Instalment options | 3 monthly payments | 3 monthly payments |
| Financing |
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 60,000 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.
Lovehoney
Shop now, pay later with Klarna
Klarna payment is now available at Lovehoney. Buy now and pay in 3 today! T&Cs apply.
boohoo
Shop now, pay later with Klarna
Shop boohoo now and pay for your order later with Klarna. Want to learn more? Use the search bar to find our full Klarna review. T&Cs apply.
Schuh
Buy now, pay later with Klarna
Shop the latest footwear styles at Schuh right now and pay in three easy payments with Klarna. 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: Up to 60% 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 when paid on time. However, if you select Klarna’s “Financing” option at the checkout, you may be charged interest (representative APR 21.9%, variable).
If you fail to make a payment within 14 days (depending on product) after an instalment is due, you will be charged a late fee. This could negatively impact your creditworthniess and prevent you from using Klarna’s payment methods.
PayPal has typically always been free for consumers to use and there are no late fees for choosing to pay with PayPal’s buy now, pay later scheme.
The winner: PayPal.
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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