Klarna vs. Sezzle: What You Need to Know

Buy Now Pay Later: one of the newest, most efficient ways to purchase things now and spread your payments out over the weeks or months to come. Often referred to as BNPL, this new form of short-term credit is offered by companies such as Afterpay, Affirm, Klarna, Sezzle, and Zip. 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 wondering: Klarna vs. Sezzle? Here are the major similarities and differences between the two.

What Are Klarna and Sezzle?

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

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

How can Cushion help me?
Cushion Bill Pay gives you more visibility and control over your finances than ever before. Many people get hit with bank fees—such as overdrafts and late fees—due to cash flow problems. With Cushion, you can consolidate and track all of your bills and BNPL payments in one place, plan your budget by reviewing what’s coming down the pike, and avoid overdraft fees by temporarily pausing payments that might overdraft your account and resuming them when you are ready.

Major Differences Between Klarna and Sezzle

Founding

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

Sezzle
Sezzle was founded in 2016 and is headquartered in Minneapolis, Minnesota.

Countries of operation

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

Sezzle
According to the Sezzle help center, you can use the service in the U.S., Canada, Austria, Belgium, France, Germany, Italy, the Netherlands, Spain, and the U.K. However, the Sezzle Virtual Card can only be used in the U.S. and U.S. Territories.

Accepted by

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

Sezzle
Sezzle has more than 78,000 merchant partners, including Apple, Disney, Nike, and Target.

Installments

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%.


Sezzle
Sezzle also offers a pay-in-four model, which is a standard payment system across most BNPL providers. With this model, you divide four interest-free payments over six weeks, with the first payment due when you make the purchase. Think of this first installment as your down payment for the order.

Rescheduled payments

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.

Sezzle
Sezzle allows you to reschedule one payment per order. Some people may be able to access additional reschedules for a fee; however, this option is not available to everyone. 

Credit limits

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.

Sezzle
Sezzle does have spending limits, but there are rules and restrictions. 

  • The Sezzle system automatically determines your spending limit on a case-by-case basis.
  • The spending limit approval process depends on how long you’ve been a Sezzle customer, your credit history pulled from a soft credit check, and your order and payment history with Sezzle. 
  • The Sezzle support team cannot tell you your spending limit or manually increase spending limits. 
  • You can view your spending limit in one of two ways: joining Sezzle Up or using a bank account as your default payment method. 
  • Your spending limit can vary by brand. 
  • If you are unable to make a purchase because of a low spending limit, you may need to lower the amount you spend on a purchase or make payments on outstanding items.

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 do not make on-time payments, 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.

Sezzle
Sezzle does not charge annual fees. However, Sezzle does charge fees for late payments, failed payments, rescheduling more than one payment per order, reactivating an account after it has been deactivated, and paying by card rather than directly through a bank account.

Credit check

Klarna and Sezzle do not do hard credit checks when you make a purchase using the service. Both providers run a soft credit check to get a sense of your credit history, Soft credit checks provide enough information to give the BNPL services a sense of your creditworthiness without penalizing your credit score with a hard inquiry.

However, Sezzle offers a feature called Sezzle Up. With Sezzle Up, you authorize the provider to report your payment history to the credit bureaus. If you make on-time, full payments to the provider, this can boost your credit history and credit score. But if you make late payments or miss them entirely, this can damage your credit.

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 online 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 Sign Up for Sezzle

There are a couple of different ways to sign up for Sezzle: on the website, in the app, or during checkout using a merchant partner. 

  • Go to the Sezzle website, download the app, or choose to pay with Sezzle at checkout
  • Enter your name and date of birth, and credit a PIN
  • 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

Frequently Asked Questions

Klarna vs. Sezzle: 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 Klarna or Sezzle?

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

Klarna and Sezzle both charge you late fees if you miss a payment or your payment fails. Your account may also get disabled, meaning that you would not be able to make future purchases with the BNPL service. 

All Klarna accounts get reported to the bureaus, so if you have late or missing payments, it can negatively impact your credit history and credit score. Similarly, if you use Sezzle Up, the provider will report your late or missed payments to the bureaus, which can negatively impact your credit report and score. 

In order to avoid late fees or other hidden fees, it is important that you carefully consider whether or not it is financially responsible to use Buy Now Pay Later. If you do decide to purchase something with BNPL, you should create a payment plan that works for your cash flow and ensures you will not be negatively financially affected by late or missed payments.

Are Klarna and Sezzle legit?

Klarna and Sezzle 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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