Klarna’s Membership Expansion Signals Rising Competition for Card Issuers

Leading buy now, pay later provider Klarna has introduced two new tiers to its membership program that allow its U.S. customers to access cash back rewards and other perks, according to a press release from the company.

Klarna’s new membership move takes aim at traditional credit card rewards programs by offering benefits consumers may often see linked to their use of credit cards.

David Sandstrom, Chief Marketing Officer at Klarna, made clear in his comments in the press release that the company designed its new membership programs with credit cards in mind.

“For too long, Americans have been told they need expensive credit cards to access premium rewards,” Sandstrom said.

“Klarna is challenging that idea. With our new membership program, U.S. consumers can unlock exclusive cash back offers, travel advantages, and lifestyle rewards without using a credit card or need to hit a spending threshold,” he added.

The new rewards plans, which the company calls Premium and Max, aren’t free, but they may not cost consumers as much to access as what they pay in annual fees for certain high-end credit cards.

The most expensive membership plan Klarna offers to consumers in the U.S. costs $44.99 per month.

The Max plan costs $44.99 per month while Klarna customers can enroll in the company’s Premium plan for $19.99 each month. The new plans join Klarna’s existing membership levels of Core and Plus, which cost users $4.99 and $9.99 per month, respectively.

Customers who sign up for a Klarna debit card can enroll in any of the four membership tiers, the company said in its release.

Klarna is offering its enhanced membership program through a collaboration with WebBank, the company that issues the Klarna card. 

Credit card issuers will want to evaluate Klarna’s new membership tiers to determine how they stack up with their own rewards offerings. That’s especially true for issuers that point to the lack of robust rewards programs from BNPL companies as the primary reason why customers should stick with using credit cards.

The Premium plan allows users to earn 1.5% cash back when they make purchases using their Klarna balance, and it comes with subscriptions to various services, including ClassPass and The New York Times.

Customers who opt for the Max membership with Klarna will receive 2% cash back when they use their Klarna balance to complete transactions. The Max program also offers subscriptions and includes access to airport lounges around the world.

The market for BNPL has expanded in recent years, and recent research suggests that it will continue to grow well into the 2030s. Premium perks may help BNPL companies in their pursuit of growth.

To defend their share of the payments market, credit card issuers can highlight how their rewards and consumer protection programs outshine those from BNPL providers. 
Issuers can also communicate to cardholders that BNPL companies may soon face more regulatory oversight that could impact their ability to meet customer expectations.