Klarna’s most popular way to pay is Pay in 4 installments.

It lets you split a $200 purchase into interest-free payments, with no fees when you pay on time. You get your order straight away, and you don’t have to pay everything upfront.

So how does Klarna make money, if it doesn’t cost a customer anything?

The answer is, the retailer pays!

Here’s why.

If you’re buying $200 roller skates, you know you’re going to be skating for a long time, but perhaps you don’t have the full $200 to buy them right at the moment. Instead $50 today and then every two weeks feels way smoother than paying $200 all at once—especially if you want to try them on before fully committing.

So, when you click pay with Klarna, Klarna pays the merchant upfront. You repay Klarna over time.

But here’s what you don’t see - we don’t give the rollerskate company the full $200, instead we deduct a small fee and pay them, say, $196. That’s where we make our money!

Stores are OK with paying Klarna a small fee because shoppers are more likely to complete a purchase when they know you can spread the cost and receive the item before paying in full.

Everyone wins

• You pay over time, interest-free

• The merchant gets paid immediately

• Klarna earns a fee for making checkout smoother