Dive Brief:
- Buy now, pay later firm Klarna is making a subscription service widely available in the U.S. through its app for $7.99 per month, following a pilot, the company said Wednesday.
- Those who subscribe to the monthly plan will have service fees waived, receive double the rewards points on their purchases, and get access to special promotional offers from retail partners, Stockholm-based Klarna said in a press release.
- The move to add the recurring revenue stream comes as Klarna prepares for an initial public offering in the U.S. The company is likely to go public “quite soon,” CEO Sebastian Siemiatkowski told Bloomberg this week.
Dive Insight:
Klarna, which has 37 million U.S. customers, is launching the monthly plan more broadly following a six-month pilot in Utah last year, Chief Marketing Officer David Sandstrom told CNBC.
A company spokesperson didn’t immediately respond to questions related to the service fees. Klarna customers shopping outside the company’s retailer network pay $1 to $2 in transaction fees, CNBC reported. The monthly plan would waive service fees when customers use a Klarna virtual one-time card to pay at those retailers, the release said.
The added service reflects the company’s aim to diversify and expand its offerings beyond BNPL. Klarna introduced a physical card in 2022 that allows users to tap BNPL options in-store.
“The thing we need to prove to ourselves and to the market is that we can add a new kind of revenue stream to Klarna,” Sandstrom told CNBC. “That’s something that a lot of companies have struggled to do.”
Compared to the rapid gains they experienced during the COVID-19 pandemic era, BNPL firms have faced slower growth and tougher economic conditions. Klarna isn’t alone in pursuing added revenue streams. Block-owned Afterpay offers a virtual card that allows customers to use Afterpay anywhere Apple Pay, Samsung Pay or Google Pay are accepted, a Block spokesperson said in November.
Afterpay launched the card in the U.S. last year “in response to demand from our customers who want to pay-in-four at a wider variety of locations,” the Block spokesperson said in an email. It’s available to select customers in the U.S. and Australia for $5.99 per month.
San Francisco-based Affirm also offers a debit card designed to be used in more of its customers’ everyday and in-person spending. The company said in November it’s adding a spending account tied to the card that will feature savings account-type interest, ATM access and direct deposit capability.
