
Klarna launches in US - Sami_Lehtinen
https://www.klarna.com/us
======
jafingi
To those of you who doesn't know Klarna, it's pretty big in Sweden (and also
used in the other Scandinavian countries).

When you order a product online, you will not pay by credit card. Instead, you
will receive an invoice with the product - so you don't pay until you have it.
Furthermore, they'll give you 30 day credit, and can even split the payment
over several months (3, 6, 12, 24 or 36) for an extra fee.

It's pretty easy to pay by installments. You get the invoice with the full
amount to pay. If you then pay a lower amount (e.g. full_amount/12 to pay over
12 months), you will automatically be transferred to the split plan, and get a
new invoice every month for 10 months.

I think it's very used in Sweden, where they've had an habit of paying via
invoice instead of credit/debit card for years.

Klarna tried a few years ago to enter the market here in Denmark, but I don't
think it has been a huge success. People in Denmark are more used to just pay
with credit card, and I think that's the same problem Klarna will face in the
US.

~~~
hackuser
> you will receive an invoice with the product - so you don't pay until you
> have it. Furthermore, they'll give you 30 day credit, and can even split the
> payment over several months (3, 6, 12, 24 or 36) for an extra fee.

How is this different and better for me than a credit card? Using a credit
card I don't have to pay until the end of the credit cycle, which usually is
after I receive the product, and pay over a longer term for the 'extra fee' of
interest. The credit card company also reverses charges for items I don't
receive, protects me from fraud (over $50), and provides a host of other
services such as frequent flier miles, insurance, etc.

Also, what are their interest rates?

~~~
kpil
Well, I guess the main driver is "one click buy" (tm) - that you don't have to
bother with spending time on entering the credit card details, security
questions, etc.

You click "buy" and then you are done. Off course, _later_ you will have to do
all the boring stuff...

~~~
hackuser
Is the difference between old (credit card) and new (Apple Pay, Klarna)
payment services is merely UI? That is, credit cards require either a card
reader or for the user to type in lots of digits, and the new services are one
click.

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lgbr
Shortly after moving from the US to Germany, I was asked to investigate Klarna
as a solution for payment processing for my company. I was pretty ill-suited
for it, as I had no idea about paying by 'invoice'.

Payment by invoice means that when you order a product online, you simply
receive an invoice along with the product when it arrives, and you're trusted
to pay for the item on the invoice within the next few days or weeks by way of
a direct bank transfer.

I found the process quite foreign to me, but the availability of fast and
cheap credit checks made this possible. Companies like Klarna maintain and/or
license a database of people in the country who have a history of failing to
pay their invoices, and they are denied when they order products from other
websites in the future.

What I'm wondering here is, how are they going to pull this off in the US?
There are credit checks, but they really only apply to whether you've made
loan payments or declared bankruptcy recently, and wouldn't reflect if a
company has a claim against you.

~~~
alkonaut
I'm not so sure you have to be very thorough doing credit checks. Klarna has a
rumor of making more money from customers who don't pay (on time) than from
those who do. Added late-fees and selling the invoices to companies who handle
bad credit can be pretty lucrative.

~~~
seivan
It's not a rumour, it's their business model. I a have no opinion on it
myself, but that's how they roll, they collect debts.

~~~
kpil
The initial invention was this very quick algorithm for risk assessment.

What they do really quick is a credit check, based on what they know. They may
also use third party suppliers the first time (or more?) if they do not have
enough data.

I am not actually sure if they "buy" the invoices, but they collect a fee for
reminders and handling if the payment is late.

------
towb
So for the HN crowd they might be famous for being a successful company using
Erlang.

All I really know is that they are all over the place if you go online
shopping here in Sweden, they probably handles payments for a majority of
online shops here, or a very large chunk of it at least.

~~~
Spiritus
Haven't they basically moved everything over to Java nowadays?

~~~
maukdaddy
Former Klarna employee here.

Klarna has a significant presence with both Erlang and Java.

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eponeponepon
This may just be Sunday-brain, but I can't seem to see what this service
actually _does_ \- is it effectively just an outsourced credit-control
department?

If so (and even if not, to be honest), I do find it interesting how often
something pops up that seems to be a return to older ways of doing things. In
this case, I'm reminded of how things worked in my early childhood (1980s, UK)
- our local butcher, petrol station and others would all keep an account,
which my parents would pay off when invoiced. In the context of the last 15-20
years, though, that appears old-fashioned to the extreme - yet here we are
reinventing new ways of doing things the old ways.

~~~
tilt_error
For one thing, it offloads the risk inherent in online transactions -- you
buying an iPad and getting a brick and the seller actually getting her money.

Second, it makes dealing with payment a _lot_ easier for any internet
business. You know the headlines from hacking where a lot of credit card
numbers are stolen. Using Klarna, the internet company does not have to handle
credit numbers by offloading that whole thing to a trusted third party.

An online store using Klarna is really a stamp of quality on that business.

Disclosure: I'm writing this from Sweden where Klarna is based, but I am not
affiliated with the company. I did some research into online payment for a
customer (a municipality) a while ago and came across Klarna.

~~~
eponeponepon
Mm, I'm not speaking against it by any stretch, just to be clear. To be
honest, I _like_ the approach more - there's a lot to be said for more
pervasive trust in commerce between vendor and customer; it feels nicer to me.

Naturally there are related problems that one has to solve, but the major one
(unintentionally extending credit to someone you shouldn't have) is, I think,
a lot less of an issue than commerce at large instinctively thinks.

