Klarna vs PayPal: Compare popular buy now pay later platforms

Klarna and PayPal are arguably two of the biggest names in the online payment space right now, so how do they compare?

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?

Overview: Klarna and PayPal Pay in 3

Klarna

woman shopping online

Klarna was founded in Sweden in 2005 and is currently the most downloaded BNPL app in the UK. It offers 3 different payment options:

  • Pay 30 days later. Receive an invoice for your full order total with up to 30 days to pay the full amount without any interest or fees.
  • Pay in 3 instalments. Spread the cost of your purchase equally over 3 months with no interest. Payments are due at the time of ordering, then 30 and 60 days later.
  • Financing. Split your payments into monthly instalments that you pay over time. (Requires a full credit check and charges interest of up to 18.9% APR.)

Popular retailers: Lovehoney, JD Sports


PayPal Pay in 3

paypal

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.

  • 3 instalments. you can use PayPal Pay in 3 for eligible shopping cart amounts between £45 and £2,000.

Popular retailers: Very.co.uk, LOOKFANTASTIC, PrettyLittleThing


Round 1: Payment options

KlarnaPayPal Pay in 3
Instalment options3 monthly payments3 monthly payments
Financing
More InfoMore Info

Klarna offers 3 different payment options for consumers, one of which acts like traditional credit and charges interest.

  1. Pay in 30 days: Pay your whole bill up to 30 days after purchase.
  2. Pay in 3 instalments: Split your total into 3 payments. The first due at time of purchasing, then 30 days and 60 days later.
  3. Financing: Apply for traditional financing, choose your repayment term and agree to possible interest charges (representative APR 18.9%, variable).

PayPal Pay in 3 offers just 1 simple payment plan.

  1. Pay in 3: You’ll need to pay the first instalment at the time of purchase and then the 2 following payments will be on the same date in the two subsequent months.

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.

Round 2: Where can you shop?

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.

Klarna top providers

LovehoneyLovehoney
Pay later!

Shop now, pay later with Klarna

Get deal
Pay later!
ASOSASOS
Pay later!

Shop with Klarna at ASOS to buy now and pay later

Get deal
Pay later!
boohooboohoo
Klarna

Shop now, pay later with Klarna

Get deal
Klarna
SchuhSchuh

Buy now, pay later with Klarna

PayPal Pay in 3 top providers

IcelandIceland
New customers!

£5 off £45 spend for new customers

New customers!
boohooboohoo

boohoo athleisure: 70% off

CurrysCurrys
Epic deals!

Save up to 30% on hundreds of laptops

Get deal
Epic deals!
ASOSASOS
New!

15% off Almost Everything for New Customers on orders over £20

Ends

New!

The winner: PayPal.

Round 3: Fees

Klarna fees

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 Pay in 3 fees

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!)

Overall winner: Is Klarna better than 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.

Compare: Klarna or PayPal Pay in 3?

1 - 2 of 2
Name Product Automatic payments Early repayment option Payment term options Free to use Late payment fee More info
Klarna
Finder Award
Klarna
Yes
Yes
Pay later, Pay monthly, 3 equal payments
Up to £5
PayPal Pay in 3
Yes
Yes
Pay later, Pay monthly, 3 equal payments
£0
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