Kevin JohnsonKlarna Bank AB, aka Klarna, is a fintech company based in Stockholm, Sweden. The firm was founded in 2005 by Sebastian Siemiatkowski, Niklas Adalberth, and Victor Jacobsson. The founders presented their idea during the 2005 Stockholm School of Economics annual entrepreneurship award but finished last in the competition.
In 2015, Klarna launched in the US and joined Spotify, Mojang, Skype, and King as one of Sweden’s “five unicorns.”
In 2022, the company’s valuation dropped from $46 billion to $6.7 billion. The fintech firm had around 7,000 employees in 2021 but laid off 10% of its workforce in May 2022 and cut an additional 500 jobs in September 2022. [1]
Klarna offers financial services, including buy-now-pay-later (BNPL) and online and direct payments. In Nov 2021, Klarna launched “Pay Now” in the US and the Klarna card to enable interest-free payments in stores or online.
The firm introduced its physical card in the UK in January 2022 and partnered with Marqeta in June 2022 to bring Visa cards to the US.
In 2022, Klarna lost $787 million within nine months and shelved its IPO ambitions. The company targets profitability in 2023 before making IPO plans.
Klarna has 31 million customers in the US, but the firm faces stiff competition from Sezzle, PayPal, Affirm, Afterpay, Zip Pay, and Splitit. [2]
Here is an in-depth analysis of Klarna’s top 20 competitors and alternatives:
1. Sezzle
Year founded: 2016
Headquarter: Minneapolis, Minnesota
Sezzle is a BNPL (buy now, pay later) company that operates in the US, Canada, Germany, and India. Its BNPL platform allows consumers to buy and pay for products in four interest-free installments. Sezzle has over 3.4 million active customers and 47,000 merchants on its BNPL platform.
In Oct 2022, Sezzle secured a $100 million credit facility from Bastion affiliates. [3] In Feb 2022, Sezzle and Zip Co agreed on a statutory merger worth $49 million, but Zip pulled out of the deal in Jul 2022 and paid Sezzle $11 million as compensation.
The company plans to use the $100 credit facility to expand its services and global reach. Sezzle is the top Klarna competitor and alternative.
2. PayPal Credit
Year founded: 2000
Headquarter: San Jose, California
PayPal Credit is a Mastercard-powered cash back credit card offered by PayPal. In Feb 2022, the company revamped its PayPal Cashback Mastercard credit card with new offerings. Users now earn 2% cash back on all purchases using the card. [4]
PayPal Credit offers instant access to credit lines for purchases and identity monitoring. Cardholders also get a 15% discount on airport meet and greet services, but consumers need a PayPal account to apply for the card.
The company also offers “Pay in 4,” used by millions of online merchants, making PayPal Credit one of the best alternatives to Klarna.
3. Affirm
Year founded: 2012
Headquarter: San Francisco, California
Affirm is a fintech company that operates one of the largest BNPL platforms in the US. In Jan 2021, Affirm went public at a valuation of $12 billion, and it is the only publicly traded BNPL provider in the US.
Both Affirm and Klarna offer BNPL services but Affirm customers can borrow up to $17,500 for purchases and pay in installments over three, six, or twelve months.
In 2022, Affirm lost nearly 80% of its value due to inflation. The company partners with global brands, including Apple Pay, Shopify, Amazon, Walmart, Adidas, and Peloton, increasing Affirm’s competitive advantage over Klarna. [5]
4. Afterpay Limited
Year founded: 2014
Headquarter: Melbourne, Australia
Afterpay is another fintech company that offers BNPL service. In Jan 2022, Block acquired Afterpay for $29 billion and shielded the company from an industry-wide downturn due to inflation and uncertainties in the market. [6]
Both Afterpay and Klarna operate in the US and Canada, while Afterpay competes with Klarna in the UK and Europe via its subsidiary Clearpay.
The main advantage of using Afterpay is its seamless integration with online stores via API or third-party plugins. The company also provides excellent tech support and ongoing maintenance. In 2021, Afterpay had over 16.2 million customers globally, making Afterpay a worthy Affirm competitor.
5. Zip Co. Limited
Year founded: 2013
Headquarter: Sydney, New South Wales, Australia
Zip is an Australian buy-now, pay-later (BNPL) company allowing users to shop in online stores and pay for purchases over four installments. In 2022, Zip lost nearly 80% of its stock value.
Zip and Klarna provide BNPL services. Zip agreed to acquire Sezzle for $491 million in February 2022, but the two companies canceled the deal.
Zip has expanded its global footprint in the past two years but has also recorded soaring debts and losses. In 2022, Zip unveiled its strategic plan to turn profitable by the 2024 financial year. Nevertheless, Zip is one of the top Klarna competitors. [7]
6. Splitit
Year founded: 2012
Headquarter: Atlanta, Georgia
Splitit is a BNPL company that offers a merchant-branded Installments-as-a-Service (IaaS) platform.
It eliminates legacy BNPL challenges to unlock BNPL benefits at the point of sale for card networks, issuers, and acquirers with a single API. In Nov 2022, Splitit was ranked #114 on the Deloitte Technology Fast 500. [8]
The main competitive advantage for Splitit over Klarna is its next-gen IaaS platform that mitigates issues with legacy BNPL. Users don’t have to worry about declining conversion funnels, clutter at checkouts, and a lack of control over customer experiences.
Moreover, its white-label BNPL offers flexible installment options, making Splitit a worthy Klarna competitor.
7. GoCardless
Year founded: 2011
Headquarter: London, United Kingdom
GoCardless is a world leader in account-to-account payments. The online platform is used by over 70,000 businesses to collect and manage recurring and one-off payments from customers’ banks.
GoCardless raised $312 million in Series G funding in February 2022. This round increased its valuation to $2.1 billion. [9]
GoCardless competes with Klarna in the fintech sector, but the rivals also partner to advance their business interests. In 2021, GoCardless teamed up with Klarna to offer its BNPL service to over 21 million US customers. Its platform processed more than $25 billion in transactions in 2021, and GoCardless is one of the top alternatives to Klarna.
8. PayPal
Year founded: 1998
Headquarter: San Jose, California
PayPal is a fintech company that provides an online payment processing platform for P2P payments. Online shoppers use PayPal’s “Pay in 4” program to pay for purchases between $30 and $1,500.
In Jun 2022, the company introduced a new BNPL product, “PayPal Pay Monthly,” with a more flexible payment option. [10]
PayPal Pay Monthly users can spread the total cost into monthly payments over 6-24 months. Unlike Pay in 4, the new program allows online shoppers to spend between $199 and $10,000. More than 22 million customers used PayPal’s BNPL service in 2022, making it a formidable competitor for Klarna.
9. ViaBill
Year founded: 2010
Headquarter: New York City, New York
ViaBill is an American fintech firm that offers a BNPL service. Its platform integrates with websites’ checkout flow, allowing online shoppers to pay the amount in full or in installments.
ViaBill raised $120 million in Feb 2022 to extend its BNPL to brick-and-mortar stores. [11]
Both ViaBill and Klarna provide BNPL services; however, the main benefit of using ViaBill is its multi-channel feature, which supports both online and brick-and-mortar stores.
In 2021, the firm launched its BNPL product across Spain, Denmark, and the US. ViaBill is one of the best alternatives to Klarna for brick-and-mortar shops.
10. FuturePay
Year founded: 2013
Headquarter: Lehi, Utah
FuturePay is a US-based credit solutions company. Retailers and DTC brands use its MyTab platform to offer flexible, secure, and seamless financing options in checkout to shoppers.
In Oct 2022, FuturePay integrated MyTab with Bold Commerce’s checkout experience to provide financing solutions to customers. [12]
The main benefit of using FuturePay’s MyTab is its relationship-centric approach. Unlike Klarna, MyTab customers can reuse their credit on a long-term basis. It doesn’t terminate the merchant-customer relationship after the customer pays the final installment.
Over 90,000 brands and retailers use Bold Commerce to tailor their checkout experiences. FuturePay MyTab’s integration with Bold Commerce increases its competitive advantage over Klarna.
11. Amazon Pay
Year founded: 2007
Headquarter: Seattle, Washington
Amazon Pay is a digital wallet offered by Amazon, a global eCommerce giant. In Aug 2021, the company partnered with Affirm to provide a BNPL checkout option through its US platform. Amazon also offers BNPL services in Australia in partnership with Zip.
Amazon competes with Klarna in the US market. Its partnership with Affirm allows Amazon customers to split over $50 purchases into monthly payments.
However, its BNPL service doesn’t cover purchases from Whole Foods, Amazon Fresh, and digital products. Yet, Amazon Pay is the best alternative to Klarna for Amazon merchants and customers. [13]
12. Zilch
Year founded: 2018
Headquarter: London, United Kingdom
Zilch is a BNPL company and one of Europe’s fastest-growing startups. In Sep 2021, Zilch became a unicorn after closing a $110 Series C funding round at a $2 billion valuation.
The company was valued at $500 million in Apr 2021 after raising $7.54 million in Series A and $80 million in Series B. [14]
Zilch competes with Klarna in Europe, but the startup is venturing into the US market. In Aug 2021, Zilch acquired US-based debt funding platform Neptune Financial to turbocharge its BNPL expansion in the US.
The startup set up a new office in Miami and partnered with New Jersey-based Cross River Bank, Checkout.com, Margeta, and Mastercard, making Zilch one of the fastest-growing competitors for Klarna.
13. Apple Pay Later
Year founded: 2014
Headquarter: Cupertino, California
Apple Pay Later is an online payment platform offered by Apple Inc. In 2021, Apple partnered with Affirm to offer a BNPL service in India and Canada. The parent company expects Apple Pay Later to generate $4 billion in 2023.
The main competitive advantage of Apple Pay Later is Apple’s vast customer base. According to insiders, Apple seeks to leverage online payments and BNPL services to accelerate iPhone growth.
The company partnered with Goldman Sachs to develop a BNPL service on its Apple Pay wallet. Apple Pay Later is the best Klarna alternative for iPhone users. [15]
14. Tymit
Year founded: 2017
Headquarter: London, United Kingdom
Tymit is a fintech startup that offers a BNPL service. In Oct 2022, Tymit raised £23 million in a Series A funding round. The firm will use the funds to accelerate product development and launch its B2B2C installment program for merchants. [16]
Tymit and Klarna offer credit cards in the UK. Both products extend their BNPL offerings, allowing users to delay payments for 30 days; however, Tymit customers can spread the cost over three months at 0% APR or up to 36 months at 22.9% APR.
Unlike Klarna, Tymit provides three options for merchants, including a Tymit-branded digital card, partner-branded card, or white-label credit card. Tymit is a fast-rising Klarna competitor.
15. Perpay
Year founded: 2014
Headquarter: Philadelphia, Pennsylvania
Perpay is an American fintech company that offers BNPL services. Customers can shop from over 1,000 brands via the Perpay marketplace and pay in four installments. In 2021, Perpay had around 45 employees and over 3 million members.
Inc. Magazine recently recognized Perpay as one of the fastest-growing companies in the fintech space. Unlike Klarna, Perpay sets users’ spending limits based on their income.
Shoppers using Perpay can pay in 4, 8, 16, or 18 installments and improve their credit score by 39 points by making payments on time. Perpay is one of the best alternatives to Klarna. [17]
16. Scalapay
Year founded: 2019
Headquarter: Milan, Italy
Scalapay is an Italian BNPL startup. In February 2022, Scalapay secured $497 million in a Series B funding round after raising $155 million in September 2021. The latest round increased its total to over $700 million, edging closer to unicorn status. [18]
Scalapay operates in Italy, France, Spain, Portugal, Germany, Finland, Portugal, Austria, Ireland, and the Netherlands. So, it competes with Klarna in Europe.
Unlike Klarna, Scalapay differentiates itself from rivals by focusing on merchant relationships. The startup added 400 new merchants to its network between Sep 2021 and Feb 2022. Scalapay is one of the fastest-growing Klarna competitors.
17. PayZen
Year founded: 2019
Headquarter: San Francisco, California
PayZen is a BNPL service provider for the healthcare industry. In Nov 2022, the fintech firm raised $20 million in equity led by 7wireVentures, increasing its total funding to $40 million. [19]
Both PayZen and Klarna offer BNPL services, but PayZen leverages data and AI to provide individualized patient payment options with interest-free plans for up to 60 months. Families can use its Care Card for pre-service payment, pharmacy, and recurring care scenarios.
In 2022, PayZen received a $200 million warehouse credit facility from Viola Credit to expand its credit lines, making PayZen one of the best Klarna alternatives for healthcare BNPL.
18. Uplift
Year founded: 2014
Headquarter: Menlo Park, California
Uplift is a BNPL company specializing in the travel sector. Travelers can purchase tickets for $300-$15,000 from airlines via its BNPL website and pay later in monthly installments with interest. Since its founding, Uplift has raised $695 million in equity and debt. [20]
Uplift and Klarna offer BNPL services in the US, but Uplift supports third-party booking sites and most top airlines. In 2021, Uplift had 133 merchant partners and is the best alternative to Klarna for travelers.
19. Thunes
Year founded: 2016
Headquarter: Singapore
Thunes is a B2B company that offers a cross-border payments platform. It operates globally and powers payments for the world’s fastest-growing businesses.
In Mar 2022, Thunes partnered with Clearpay to provide BNPL services to merchants and marketplace partners in the UK and Europe. [21]
Thunes supports 79 currencies across 126 countries. Online businesses can collect funds from customers through 300 different methods, making Thunes an emerging Klarna competitor in the UK and Europe. [22]
20. Laybuy
Year founded: 2016
Headquarter: Auckland, New Zealand
Laybuy is a fintech firm that offers a BNPL service that allows users to pay in six weekly installments. In May 2022, Times Magazine recognized Laybuy as one of the most trusted brands based on reviews from 10,000 UK consumers.
Laybuy competes with Klarna in the UK, but the service requires customers to pay the first installment on the day of purchase and a fee of £6-£24 for missed payments.
In 2022, Laybuy ranked third in the customer satisfaction rating behind Klarna and Clearpay. Laybuy is a worthy Klarna alternative in the UK. [23]
References & more information
- Browne, R. (2022, Nov 24). Klarna CEO says the firm was lucky to cut jobs when it did. CNBC
- Burroughs, C. (2022, Dec). Buy-now, pay-later kingpin Klarna’s valuation dropped from 45.6 billion to $6.7 billion in 2022. Business Insider
- FG Editor (2022, Oct 19). BNPL Sezzle secures $100m credit after merger falls through. Fintech Global
- Holzhauer, B. (2022, Dec 20). PayPal Credit Card Review: 2% cash back on all purchases with no annual fee. CNBC
- Sweet, K. (2022, Sep 10). Affirm weathering decreasing stock price. Post Journal
- Butler, B. (2022, Jul 12). After co-founders take home record $264 million as Australian executive pay bounces back. The Guardian
- O’Shea, M. (2022, Jul 12). Zip share price jumps 6% after merger deal with Sezzle is canceled. The Motley Fool
- Splitit USA, Inc. (2022, Nov). Splitit was named one of the fastest-growing companies in North America on the 2022 Deloitte Technology Fast 500. PRNewswire
- PYMNTS (2022, Feb 8). GoCardless Valued at $2.1B After Series G. PYMNTS
- Perez, S. (2022, Jun 15). PayPal expands its “pay later” options with a more flexible “PayPal Pay Monthly” service. TechCrunch
- ViaBill (2022, Feb 15). ViaBill Raises $120m to Bring Buy Now Pay Later to Physical Retail. Business Wire
- TP News (2022, Oct 17). FuturePay integrates its MyTab platform with Bold Commerce’s checkout. The Payers
- Ryan, T. (2021, Aug 30). Amazon finally catches the ‘buy now, pay later’ wave. Retail Wire
- Johansson, E. (2021, Nov 10). Zilch secures $110 million Series C at a $2 billion valuation. Verdict
- Cocheo, S. (2022, Apr 4). Apple’s Growth Strategy Emphasizes Payments + Buy Now, Pay Later. The Financial Brand
- Johansson, E. (2022, Oct 26). Klarna rival Tymit bags £23 million as the BNPL industry keeps struggling. Retail Banker International
- Mosconi, A. L. (2021, Jul 15). Perpay now helps customers improve their credit scores. Technical.ly
- Johansson, E. (2022, Feb 23). Scalapay inks $497 million Series B in beleaguered BNPL market. Verdictonline pa
- FG Editor (2022, Nov 16). PayZen raises $20 million for healthcare buy-now-pay-later. Fintech Global
- Kenkare, P. (2022, May 17). Best ‘Buy Now, Pay Later’ Apps for May 2022. CNET
- Thunes Admin (2022, Mar 31). Thunes Partners with Clearpay to Enable Buy-Now-Pay-Later Options for its 100,000 Merchants. Thunes
- Prosser, D. (2021, Nov 12). How Thunes is Building a New Payment System for the World. Forbes
- Daley, J. (2022, May 10). Best Buy Now, Pay Later companies. The Times
- Featured Image by nl
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