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: Missguided, 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 14,000 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.

Klarna top providers

ASOSASOS
New!

New customer: 15% off site wide on orders over £20

New!
Bensons for BedsBensons for Beds
Top deal!

Get £25 off £500 spend with Bensons for Beds

Ends

Top deal!
boohooboohoo
Sale!

Sale alert! Up to 80% off everything!

Get deal
Sale!
John Greed JewelleryJohn Greed Jewellery

Up to 80% off in the John Greed Jewellery sale

PayPal Pay in 3 top providers

CurrysCurrys
Epic deals!

Save up to 30% on 100s of products

Epic deals!
ArgosArgos
Sale!

Argos top tech deals: save up to £150 now

Sale!
Very.co.ukVery.co.uk
Top deal!

Sale! Up to 30% off selected Home & Furniture

Get deal
Top deal!
MuglerMugler
Popular!

Winter sale: up to 30% off!

Ends

Get deal
Popular!

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?

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
£0
PayPal Pay in 3
Yes
Yes
Pay later, Pay monthly, 3 equal payments
£0
loading

Compare up to 4 providers

Popular Reads

Shop the latest fashion now with PrettyLittleThing and pay later with Klarna or Clearpay

Shop the latest fashion now with PrettyLittleThing and pay later with Klarna or Clearpay

PrettyLittleThing offers Klarna and Clearpay. How do you choose which buy now pay later service is right for you? Here are some tips.

Read more…
Klarna toys: Buy toys now and pay later with Klarna

Klarna toys: Buy toys now and pay later with Klarna

Pay 30 or even 60 days later when toy shopping by choosing Klarna at the checkout of your favourite online stores.

Read more…
Alipay review: What is it and how does it work?

Alipay review: What is it and how does it work?

Alipay is a Chinese payment giant. But can you use it in the UK? We cover the latest on this payment platform with more than a billion global users.

Read more…
Klarna games consoles: Buy Xbox, PlayStation and Nintendo and pay later with Klarna

Klarna games consoles: Buy Xbox, PlayStation and Nintendo and pay later with Klarna

Are you a fan of gaming but feeling the pinch this month? Shop for the latest consoles now and pay later with Klarna.

Read more…
Clearpay games consoles: Buy Nintendo now and pay later

Clearpay games consoles: Buy Nintendo now and pay later

Looking to buy a new Nintendo Switch? Shop now and pay in manageable instalments with Clearpay.

Read more…
AppToPay review: How it works and if it’s right for you

AppToPay review: How it works and if it’s right for you

Find out how buy now pay later service AppToPay works and whether it’s the right choice for you and your next online purchase.

Read more…
Clearpay vs Laybuy: Compare popular buy now, pay later platforms

Clearpay vs Laybuy: Compare popular buy now, pay later platforms

We compare 2 of the UK’s most popular buy now, pay later services, Clearpay and Laybuy, and explore which might be the right choice for you.

Read more…
Klarna vs Laybuy: Compare popular buy now, pay later platforms

Klarna vs Laybuy: Compare popular buy now, pay later platforms

How do Klarna and Laybuy compare? We put two of the UK’s most popular buy now, pay later services head to head to see how they match up and which might be the right choice for you.

Read more…
Clearpay Day 2021 is live!

Clearpay Day 2021 is live!

Shop deals, deals, deals with up to 70% off this Clearpay Day.

Read more…
M&S and John Lewis announce their own buy now, pay later schemes

M&S and John Lewis announce their own buy now, pay later schemes

M&S and John Lewis have launched in-house challengers to buy now, pay later services like Klarna.

Read more…

More guides on Finder

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site