Klarna launches an $8/mo subscription as BNPL giants swipe up a fresh revenue stream
Buy & subscribe… Klarna’s rolling out a subscription service to lock in monthly $$ from loyal BNPL (buy now, pay later) users. Refresher: the Swedish fintech titan lets folks pay in four installments when they check out from 200K+ retailers, including Instacart, Wayfair, and Sephora. Soon, Klarna Plus subscribers who pay $8/mo will get service fees waived and earn double rewards points. Other perks include members-only discounts from big brands like Nike.
Unicorn w/ fewer horns: Klarna’s valuation sank to $6.7B last year from $45B as the pandemic-ecomm boom cooled and recession jitters rose. Now it’s looking for ways to boost revenue ahead of its anticipated US IPO.
BNPL goes PNPL… pay now and pay later. One-fifth of Americans under the age of 40 use a BNPL service, and subscription models could help companies boost usage and earn recurring revenue. Klarna’s not the only one taking the plus route: Afterpay launched a $10/mo sub last year (Afterpay Plus, natch), letting shoppers check out wherever mobile payments are accepted. Affirm is also said to be looking to launch a subscription plan (...Affirm Plus) that would offer a 0% annual percentage rate on purchases up to $2.5K.
The flip side: Financial experts worry that the BNPL boom could create more money troubles for US consumers grappling with a record $1T+ in credit card debt.
Recurring is alluring… BNPL businesses already have slim profit margins, and higher interest rates have made funding consumer shopping sprees even pricier. By offering monthly plans, companies hope to generate a steady flow of revenue with recurring payments. But subscription fatigue may be peaking: according to one survey, 76% of consumers say financial strain is causing subscription burnout.