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Inside Klarna
Aug 5, 20215 min read

How does Klarna really work?

Klarna K logo

by Klarna

At Klarna we’re on a mission to make your shopping experience as smoooth as possible. 

That’s why we have developed a series of products and services that allow you to shop, pay and bank on your own terms. 

Klarna allows you to pay in several ways depending on your needs. We have three credit products in the UK – two ‘Buy Now, Pay Later’ products (Pay in 3 and Pay in 30 days) and a longer term financing option for higher-ticket items. To use any of our UK products you must be a UK resident over 18. With Klarna you can also pay immediately at checkout with your card of choice.

Buy Now, Pay Later. 

We offer two interest-free and fee-free Buy Now, Pay Later (BNPL) options:

  • Pay in 3
    This option allows you to spread the cost of your purchase into 3 equal interest-free and fee-free instalments. The first payment is made at point of purchase, with remaining instalments scheduled automatically every 30 days.
  • Pay in 30 days
    With Pay in 30 days you have up to 30 days to pay for your goods after they are shipped, with no interest or fees. This means you can return the items if they’re not what you expected or need, without any money leaving your bank account.

On our BNPL products we conduct robust eligibility assessments on each and every purchase, including a soft credit check, which will not affect your credit score. This means we take a real time view of someone’s financial circumstances so we only lend to those who can comfortably pay us back.

We make sure you’re informed ahead of time before a payment is due. In our Klarna App you’ll have the chance to pay off your balance earlier or, in case you need some extra time, you can extend the due date for free and get 10 additional days to pay. You can extend the due date only once per order.  

With our BNPL products you will never pay more than the price of the purchase. If you miss a payment we’ll reach out to you to ask for repayment but there will never be a late payment charge or interest and your credit score will not be impacted. Should you struggle to pay, we have a dedicated vulnerable customer team that can help you find a solution that works for you. If you miss a payment, however, we will restrict the use of our services. 

If you have fallen behind on your payments and if after repeated attempts we are still unable to contact you to help you manage your payment plan, we will refer you to a debt collection agency. There are still no additional fees or interest charges passed to you and your credit score will not be affected. We only ever use debt collection agencies to continue to help us make contact with customers. We never sell unpaid debts to debt collection agencies on these products. This means Klarna maintains total control over how the debt is managed. We do not use enforcement agencies or bailiffs and neither do our debt collection agencies. 


We offer a traditional regulated credit product for the purchase of higher-ticket items in payment plans of 6-36 months. Financing may be offered interest-free or interest-bearing depending on the retailer. The highest interest rate charged is 18.9%, however, a great majority (93%) of Klarna financing sales are interest-free. 

When you select financing at checkout you can choose your preferred payment plan. You’ll be informed if there is an annual interest rate upfront before you complete the application. You will know instantly if you are approved and can complete the order right away. This involves a hard credit check that may impact your credit score.

We always notify you before a payment is due and you can set up automatic payments or pay any amount – up to the entire balance- earlier than the due date anytime. If you don’t make your payments on time, there are 3 stages before an account is terminated. At each stage we send you a credit act document and add a £12 fee to the account before eventually terminating the account and passing it on to debt collectors to help us contact you. Missing payments can affect your credit score. After being turned over to a debt collection agency, your credit score may be affected. On our Financing product we do sell unpaid debts to debt collection agencies, as is standard industry practice for these products. 

Where can I use Klarna?

There are different ways to shop with Klarna. The easiest is through our Shopping App. Once you download the App you can Pay in 3 in any online shop – yes any shop of your choice regardless of whether they’ve partnered with Klarna or not!

Klarna partners with over 15,000 retailers in the UK – and 250,000 worldwide – including, H&M, IKEA, Samsung, ASOS and Peloton and you can also choose to pay with Klarna directly on the merchant’s website. Klarna is additionally available in 5,000 physical stores across the country.

Curious to know more? You can learn about how we make money and much more on our Extra O blog!