As a modern business owner, you may be exploring the use of a buy now, pay later (BNPL) service such as Klarna to enhance your DotGO website. Although there are many options in the BNPL market, DotGO has chosen to work with the two market leaders Klarna and Clearpay.  Klarna is a prime choice among them. However, it's important to determine if Klarna is the right fit for your online shop.

This guide will provide an overview of what Klarna is, how it works, and suggest alternatives if Klarna isn't a good match.

What is Klarna?

Klarna is a payment solution that enables businesses to offer financing options for purchases from their DotGO ecommerce websites, rather than expecting full payment upfront. Klarna functions as a lender, providing short- and long-term financing that is usually interest-free to the buyer . Founded in 2005 in Sweden, Klarna currently serves over 205,000 merchants across 17 countries.

With Klarna, businesses can give customers the ability to pay for purchases over time, in instalments, without incurring interest.

How does it work?

When a purchase is made, Klarna pays the you (the merchant) in full on the consumer's behalf. Then, Klarna sends a bill to the customer for the purchase. Customers can make the required monthly payments or pay off the Klarna balance in full at any time.

If you decide to implement Klarna in your business, your customers will process payments through Klarna and the funds will be transferred to your business.


Klarna does require a minimum purchase amount. To split a payment, Klarna requires a minimum purchase of £10.00.

Does Klarna Have a Maximum Purchase Limit? No, Klarna does not have a set maximum purchase limit. However, a consumer's purchase eligibility is based on their individual financial circumstances. Klarna uses a metric called "Purchase Power" which automatically evaluates factors such as a consumer's Klarna payment history and outstanding Klarna balance.

Pros and Cons

Advantages of Using Klarna? 

Ease of setup:

Klarna is easy to set up and user-friendly, and it can integrate with DotGO's eCommerce platform, allowing merchants to quickly start accepting Klarna payments.

To integrate Klarna, just apply through Stripe account and then add to checkout with a single button click from your DotGO portal.


By using Klarna, businesses can offer customers flexible payment options, making them more likely to make a purchase and reducing shopping cart abandonment.


Klarna takes on the risks associated with financing, protecting merchants from financial consequences of customers who do not pay. It also offers fraud and chargeback protection.

Customer Loyalty:

Klarna can help build customer loyalty as customers who have a positive experience spreading out their payments via Klarna are more likely to become repeat customers.

What are the Disadvantages of Using Klarna? 


Klarna charges businesses an extra fee for each transaction, usually a percentage of the total transaction value.

Potential for Fraud:

As many BNPL services rely on internal algorithms instead of traditional credit checks, vulnerabilities in internal systems can be targeted by fraudsters.

Is Klarna Safe to Use in Your Business?

Some businesses may be hesitant to use Klarna's BNPL service due to concerns about fraud. However, Klarna has implemented several safety measures to protect businesses. Transactions are heavily encrypted and Klarna monitors activity for suspicious behavior, and offers 24/7 customer support. As a result, businesses that accept Klarna payments can be confident that their customers' sensitive financial information is secure.

Does Klarna Check Credit?

Klarna does not conduct a hard pull of a customer's credit report, which means it will not affect their credit score. However, Klarna still obtains information about a consumer's credit history, employment history, and current income during the application process. Generally, consumers need to have a good or excellent credit score to qualify for Klarna financing.

Does Klarna Report to Credit Bureaus?

Klarna reports purchase and payment activity to the major credit reporting bureaus. If a customer finances their purchase and misses a payment, it can negatively impact their credit score.

How Does Klarna Make Money?

Klarna makes money by charging merchants a fee on each financed transaction. The company also earns interest on the money shoppers pay over time and generates revenue through credit products and merchant services.

Are there any interest-free plans for customers?

Klarna offers two interest-free plans: Pay in 4, which allows customers to split a purchase into four equal payments made in two-week increments and Pay in 30, which defers the whole purchase payment by 30days. These plans are interest-free as long as payments are made in full according to the terms.

How Do Klarna Payments Work?

If you integrate Klarna into your DotGO website, customers only need to provide their mobile number to access financing. After completing their purchase, customers are redirected to Klarna to finalize their payment.

From the customer's perspective, when they purchase a product from a business offering Klarna, they have the option to pay with Klarna at checkout. They will be asked to provide their email address and phone number.

After completing the purchase, Klarna sends the customer an instructional email or text message. Customers are typically given an agreed-upon number of days to pay for their purchase. They can make payments by logging in to their account on Klarna's website or app.

If the customer is not able to pay within the set timeframe, Klarna works with them to set up a payment plan, although interest may apply at this point.

Is Klarna Right for Your Business?

Klarna is an excellent BNPL option, but it may not be the right fit for your business.

The service comes at a cost, with extra transaction fees and variable fees between 3.29% and 5.99% of the transaction total for all payment plans.

While some merchants may assume they'll make up for these costs through increased sales volume, it ultimately depends on various factors such as your business model, average order value, and customer base.

In summary, Klarna is a good choice for businesses with high shopping cart abandonment rates and new or untested businesses, as it can legitimize the business and boost conversion rates. However, it may not be a good fit for businesses with higher average basket values or lower profit margins, as the added fees may outweigh the potential for increased sales.

Alternative options include other BNPL services, merchant accounts, credit cards, and personal loans.

Ultimately, it's important to weigh the costs and benefits to decide if Klarna or any other BNPL service is right for your business.


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