Afterpay vs Klarna: What You Need to Know

Buy Now Pay Later, BNPL for short, has become one of the newest, most efficient, and most popular ways to get things now but spread your payments out over the weeks or months to come. Usually the BNPL provider that you use depends heavily on which merchant you’re shopping through. Although some merchants, such as Target and Amazon, accept several different providers. So you’re trying to figure out: Afterpay vs. Klarna. Here are the major similarities and differences between the two.

What Are Afterpay and Klarna?

Afterpay and Klarna are BNPL providers that make it easier for you to buy things from brick-and-mortar or online stores using short-term credit. When you pay with Afterpay or Klarna in-person or through online shopping, you can get what you bought now and then repay the BNPL provider in installments, often interest-free, over the next several weeks or months.

The most common repayment option among BNPL providers is the pay-in-four model, which allows you to divide four payments over six weeks with the first installment due when you check out with the merchant. The remaining payments are divided into equal payments due over the next six weeks.

From 30,000 feet up, Afterpay and Klarna have similar offerings; however, they differ when it comes to the nitty gritty.

Major Differences Between Afterpay and Klarna

Founding

Afterpay
Afterpay was founded in Sydney, Australia, in 2014. 

Klarna
Klarna was founded in Stockholm, Sweden, in 2005.

Countries of operation

Afterpay
Afterpay operates in the U.S., Canada, United Kingdom, and New Zealand.

Klarna
Klarna is available in the U.S., Great Britain, Sweden, Norway, Finland, Denmark, Germany, Austria, the Netherlands, Belgium, and Switzerland.

Accepted by

Afterpay
Nearly 86,000 merchants around the world — including Kmart, Target, and Sephora — accept Afterpay. 

Klarna
More than 400,000 merchants around the world accept Klarna. Some merchant partners include Etsy, Macy’s, Sephora, and Lululemon.

Installments

Afterpay
Afterpay also offers a pay-in-four model, which is a standard payment system across most Buy Now Pay Later providers. With this model, you divide four interest-free payments over six weeks, with the first payment due when you make the purchase.

Klarna
Klarna offers several different payment options to divide up your purchases. 

  • Pay in 4: One of the most popular payment options, Pay in 4 allows you to split up your total balance into four equal payments to be paid automatically every two weeks, interest-free. The first payment is due at checkout.
  • Pay Now: Pay the total amount upfront either online or in-store using the mobile app.
  • Pay in 30 Days: Pay nothing upfront. Get your purchase now, then pay the full balance in 30 days, interest-free.
  • Pay Over Time: Ideal for larger purchases, Pay Over Time allows you to break up big balances into smaller installments to be paid over 6–24 months. Interest rates range from 0–29.99%.

Rescheduled payments

Afterpay
You used to not be able to reschedule payments with Afterpay. However, the service changed its policy to allow customers to reschedule payments. There are certain stipulations, though.

  • Afterpay does not allow you to move the payment date on certain purchases.
  • You can only move one payment per order.
  • You are technically only allowed to move the second and third payments through Afterpay to align with your cash flow; if you need help moving your first or last payments, you should contact Afterpay customer service.
  • Once the payment is overdue or due within 24 hours, you cannot reschedule the payment.
  • If you have been an Afterpay customer for 42 days or less, you cannot access the rescheduled payment feature.
  • Customers already taking advantage of a hardship repayment arrangement cannot access the feature.  


Klarna
Klarna allows you to reschedule your next payment date up to 14 days once per order. You can reschedule within the Klarna app by visiting the Payments page, selecting the order that you would like to reschedule a payment for, and tapping Extend Due Date.

Credit limits

Afterpay
With Afterpay, you can have a balance of $2,000 on your account at any given time; each individual purchase can be a maximum of $1,500.

Afterpay likely won’t extend the maximum limit to new users. They will start you out with a smaller credit limit, and once you prove that you are a good BNPL customer, Afterpay can increase your credit limit.

Klarna
There is no spending limit when you shop with Klarna. However, when you make a purchase, Klarna determines on a case-by-case basis whether you are eligible to receive the short-term loan. 

To view your estimated spending amount, you can take a look at your Purchase Power in the app. This amount is subject to change and based on factors like your outstanding balance and your payment history with Klarna. 

Fees

Afterpay
All sales made through Afterpay are subject to a 4.17% merchant fee. Customers don’t have to pay any hidden fees unless they miss a payment or make it late. When you miss a payment, Afterpay charges $10 late fees, plus another $7 fee if your account is not brought current after seven days.

When using Buy Now Pay Later, it’s important to use some sort of budgeting tool to ensure that you are avoiding a late payment and unnecessary fees.

Klarna
If a payment does not go through, Klarna will charge you a late fee up to $7. Klarna will then try to reprocess the payment, and if it fails again, the amount will be added to your next payment. 

You should note that if you miss a payment, you will not be able to continue using Klarna until you’ve settled up your outstanding balance. Klarna will also report your late or missing payments to the credit bureaus, which can negatively affect your credit history and credit score.

Soft credit check or hard credit check

Afterpay and Klarna do not do hard credit checks when you make a purchase using the service. Klarna runs soft credit checks to get a sense of your personal finance history and determine if you are eligible for a short-term loan. A soft credit check provides enough information to give the BNPL services a sense of your creditworthiness without penalizing your credit score with a hard inquiry.

Afterpay, on the other hand, runs neither a soft credit check nor a hard credit check to approve you for short-term financing.

How to Sign Up for Afterpay

You can sign up for Afterpay using the Afterpay app, at afterpay.com, or by choosing Afterpay as your payment method at checkout. 

  • Go to the Afterpay website or download the app
  • Enter your email address, phone number, date of birth, valid ID, and a credit or debit card, or bank account number
  • Complete sign-up

How to Sign Up for Klarna

You can sign up for Klarna using the Klarna app, at klarna.com, or selecting Klarna as your payment method at a participating store. 

  • Go to the Klarna website, download the app, or click that you’d like to pay with Klarna when making a purchase
  • Provide the necessary personal information
  • Complete sign-up

How to Use Buy Now Pay Later Responsibly 

Buy Now Pay Later (BNPL) services allow consumers to make purchases online or in-store by breaking up larger ticket items into a small number of fixed installment payments. BNPL is attractive to consumers because purchases are typically interest-free and don’t involve many of the fees that come with bank accounts and credit cards.

The popularity of BNPL has grown exponentially in recent years — and for good reason. These payment options provide more opportunities for people of underserved and underbanked populations. However, there are also a number of potential risks involved.

Advantages of Buy Now Pay Later

  • You get easier access to goods and services
  • Customers pay low-to-no fees and interest charges on their payment plan
  • You can maintain and build your credit score

Disadvantages of Buy Now Pay Later

  • It is easy to overspend
  • There are potential fees or interest charges and credit score damage
  • Buy Now Pay Later can be difficult to manage
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Frequently Asked Questions

Afterpay vs. Klarna: Which is better?

It is not a matter of which Buy Now Pay Later service is better. Rather, it is important to consider whether BNPL is the right choice for you at all.

The service that you use as a customer depends on which merchant or company you are purchasing from and in what country you are located. All brick-and-mortar and online retailers don’t partner with all BNPL companies.

Before deciding to make a purchase with BNPL, it’s important to consider: how much you really want or need the product or service, your budget, and cash flow.

What happens if I never repay Afterpay or Klarna?

If you fail to make your scheduled repayments through Afterpay, Klarna, or any other BNPL providers, you can run into credit and financial issues. 

Afterpay and Klarna both charge late fees on missed payments. Your account may also get disabled, meaning that you would not be able to make future purchases with the BNPL service.

When it comes to late payments affecting your credit, the two BNPL providers differ. Klarna reports late and missing payments to the credit bureaus, so if you fail to make a payment, it can negatively impact your credit history and credit score. Afterpay does not report missing payments to the credit bureaus.

Are Afterpay and Klarna legit?

Afterpay and Klarna are both legitimate and secure services. Both keep customer data safe and sound and act much the same as credit cards, personal loans, and payday loans except with shorter-term repayment plans.

Cushion helps you waste less money, save more, and live a financially healthier life. We monitor your bank and credit card accounts 24/7, find and alert you about pesky fees, let you know which fees are negotiable, which banks are cooperative, and can even automatically negotiate on your behalf.* To date, Cushion has secured customers more than $13 million in bank and credit card fee refunds—and we’re just getting started.

*Cushion only negotiates fees with high refund odds. We cannot guarantee any negotiations, a regular frequency of negotiations, or fee refunds—your bank makes the final call.

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