Klarna strives for new and sustainable standards in the financial industry to improve the financial well-being of consumers and encourages competitors to follow suit.
- Klarna strives for new and sustainable standards in the financial industry to improve the financial well-being of consumers.
- The product changes include among other things, a more than doubled payment period for bills and the elimination of revolving credit.
- Klarna becomes internal data, such as the proportion of invoices that receive reminder fees or make use of collection agencies accessible. And thus promote a more transparent discussion within the industry.
Klarna, global banking, payment and shopping service provider, today announced five product changes in Germany. The improvements are the latest step in an initiative aiming to set new standards for fair and sustainable payments in the financial industry. Experiences from other markets where the product changes have already been implemented show a significant improvement for consumers. This is reflected in a sharp drop in reminder fees and customer service contacts. With the product changes, Klarna wants to challenge its competitors in the German financial sector to follow suit. With the aim of improving the financial well-being of consumers.
Positive consequences of the new standards for consumers and retailers
Klarna is now doubling the payment period for invoices and will eliminate superfluous fees over the next few months. In addition, the service provider ends all credit offers without a clear end date, so-called revolving credit, and increases the number of free payment reminders. In 2021, when the product changes were rolled out in Scandinavia and the UK, Klarna was able to make an immediate positive difference for consumers and retailers. In Sweden, for example, the proportion of invoices that included late fees fell by 61 percent. The number of consumers who contacted customer service with billing-related questions fell by 18 percent. And for those who opted for the financing option, a faster payback of around 20 percent is expected. In total, Klarna customers were able to save 50 million US dollars in interest and fees in the fourth quarter of 2021 alone.
Financial sector: increase transparency in the market
Sebastian Siemiatkowski, CEO of Klarna, explains the objectives: “Klarna has both the opportunity and the responsibility to drive change towards an improved financial situation for consumers worldwide. We can do this by raising awareness and making visible the lack of transparency in the market. However, we have the greatest influence when we take action ourselves. We will therefore make far-reaching product changes in Germany with immediate effect. We believe that both consumers and retailers will benefit from this and we call on the industry to follow suit.”
Setting new product standards in the financial sector
The product changes will be introduced successively over the next few months with the aim of increasing customer autonomy and creating more transparency. The changes to the offers at a glance:
- Pay Later (purchase on account): 14 days become 30 days. In this way, Klarna gives all consumers more time and flexibility when paying and thus reduces the risk of forgetting an invoice. Instead of 14 days after receipt of the goods, all consumers now have 30 days to pay for their purchases.
- Pay in 3: With the introduction of “Pay in 3”, consumers have the opportunity to spread the cost of their purchases over three interest-free installments. The first payment is made upon purchase, the further installments are automatically due every 30 days. They offer consumers a free and more sustainable alternative to conventional credit.
- More free payment reminders: From now on, Klarna will send even more free payment reminders via more channels. And in this way to support all customers to pay on time and never forget a bill again. In total, Klarna reminds customers six times by email, via the Klarna app and by post. And makes it even easier to think about paying the bills.
Product standards that belong to the past
Klarna wants to abolish the following standards for the offers in the future: