Splitit vs Klarna

How Splitit works

Splitit is an installment-based payment platform that works in line with a customer’s existing credit card, which is used to fund their repayment plan. That means there’s no credit checks, no additional line of financing, and no need to navigate to a third-party loan site. Customers with credit cards already have everything they need to create an affordable, manageable, installment plan. 

When it comes to approval, it’s all based on the current balance that’s available on the customer’s credit card. 

Rather than being charged for the total purchase amount upfront, Splitit will trigger a pre-authorized payment of the total. From here, the customer can decide on a repayment schedule and amount that fits their budget. Payments will then be deducted from their credit card on a monthly basis.

The customer won’t pay any fees, penalties, or additional interest (besides any existing fees that are charged by the credit card provider).

From a usability perspective, Splitit is a white-label solution that’s integrated into the merchant’s existing payment flow . It becomes part of the retailer’s brand, with no application process and no need to leave the checkout to navigate to a third-party platform. The consumer just enters their credit card details and chooses the number of monthly payments.

How Klarna works

Klarna has a few different payment options and avenues. Customers can shop online and in-store using the Klarna app or choose Klarna at a retailer’s online checkout and fill out an application form to sign up to Klarna. Once they’re there, there’s 3 BNPL options to choose from:

Pay in 4: The total is divided into 4 interest-free payments, which are charged across 2 week periods. A soft credit check is required before approval. Once approved, customers can use a debit card, credit card, or bank account to pay.

The first payment is charged when the retailer confirms the order. From there, the customer will make a further 3 payments every 2 weeks.

Pay in 30 days: The customer doesn’t make any payment upfront. They’ll have to undergo a soft credit check before being approved. Once the retailer ships the order, Klarna will send the customer an invoice that’s due in 30 days.

Customers can decide whether to return or keep the items and pay the final balance, interest-free, with their debit card, credit card, or bank account.

Klarna financing (via WebBank): Customers can apply to finance their order through Klarna’s partnership with WebBank. They’ll fill out an application within the checkout phase, undergo a hard credit check, and get an instant decision on whether or not they’re approved.

If approved, they’ll be given repayment options with interest (up to 29.9% APR). Repayments are due monthly.

Klarna charges late payment fees of $7 or up to 25% of installment amount. If a customer’s payment method has insufficient funds, they may be charged up to $27. If they default on payments, their account may be passed onto a debt collection agency and they may not be eligible to use Klarna in the future.

Splitit vs Klarna at a glance

For customers

For retailers

A closer look at Splitit vs Klarna

The best BNPL or installment payment solution is all about figuring out what your customers want and how to deliver that in a way that fits your business strategy. There are a few key factors to consider when deciding what that looks like.

Splitit vs Klarna: Customer experience breakdown

We know that creating a good customer journey is at the core of everything you do – and it should be a big consideration when deciding how to implement BNPL into your payment strategy. 

Existing card based or finance based

With Splitit, customers don’t need to apply for additional  financing. It’s a more responsible  option for people who don’t want to undergo a credit check, add an additional line of credit to their financial profile, and pay interest on a new loan. It also works for customers who want to avoid charging the total order value upfront and paying interest on their credit card. 

Our installment payment platform leverages their existing credit card, based on the available card limit at the time of purchase. If they have enough space on their card, they’ll automatically be approved and we’ll place an authorized hold of the total purchase value (as long as it’s within the spending limit set by the retailer).

Klarna’s payment options are all dependent on the customer’s financial history. Pay in 4 and Pay in 30 days require a soft credit check. If approved, they will connect their debit card, credit card, or bank account to an interest-free Klarna repayment plan. 

Klarna financing is like a traditional loan. Customers will apply for financing, which means they’ll undergo a hard credit check and, if approved, take out a new line of credit through WebBank.

Fees and interest

Splitit is free for customers to use. They don’t have to pay any fees or interest (unless they fail to pay their monthly credit card bill, in which case the terms and conditions outlined by their credit card provider will apply). Splitit also allows customers to carry on benefitting from credit card rewards and points. 

Klarna’s Pay in 4 and Pay in 30 days options are free, but do have some penalties for missed payments (more on that below). Customers who use Klarna financing can expect to pay up to 29.9% APR.

Penalties

Splitit doesn’t have any late payment fees. If a customer misses a payment, the entire remaining pre-authorized balance will be processed after 7 days. Regular credit card terms and conditions outlined by the customer’s credit card provider will apply.

In Klarna’s case, late or missed payments can result in a late fee of $7 or up to 25% of the first installment amount. If a payment is charged and there are insufficient funds in the account, the customer may be charged a fee of up to $27. 

For Klarna financing, which is handled through WebBank, missed or late payments can also have a negative impact on the customer’s credit profile. In all cases, late or missed payments can impact a customer’s chances of being approved for Klarna payment methods in the future.

Payment periods

Splitit’s installment payment setup means that customers can choose a flexible repayment plan that suits their budget. This falls into monthly payments over a set time (up to 12 months, depending on the retailer’s terms). Payments will automatically be deducted from their credit card. 

Klarna’s repayment periods vary, depending on the payment solution:

• Pay in 4: 4 payments every 2 weeks. 
• Pay in 30 days: Invoice is sent to the customer once the order has been processed and the payment is due after 30 days
• Klarna financing: Monthly payments across periods of 3 months or longer

Klarna customers can make repayments via debit card, credit card, or through their bank account.

Splitit vs Klarna: Retail experience breakdown

One half of the job is knowing what works best for your customers. The other half is all about how to factor these needs into your business and brand strategy.  

Cost of use

Splitit is designed to suit different business needs and goals, with payment packages that include free set-up and integration and guaranteed full transaction amount. Our sales team can give you a fast quote, get in touch today.

Klarna’s fees vary across the different payment solutions: 

• Pay in 4 and Pay in 30 days: $0.30 fixed fee + 5.99% 
• Klarna financing: $0.30 fixed fee + 3.29% variable fees 

Merchant payment periods

With Splitit, repayment cadence depends on the package that best fits their business. Retailers may receive payment upfront or monthly, in line with the customer repayment plan.

With Klarna, retailers will receive customer payouts upfront. Timing is dependent on the payout schedule they agreed in their initial contract with Klarna. 

Klarna also factors in a “payout delay,” which is designed to mitigate back and forth over invoices or registering returns. The payout schedule + payout delay time period varies, but typically falls into a weekly cadence. 

Site integration

Splitit is flexible and puts the retailer in control. As a white-label solution, you can make BNPL a seamless part of your customer experience and your brand. It’s designed to integrate with all major e-commerce platforms, including Shopify and BigCommerce. We also support with custom integration if needed. 

In terms of the user journey, customers stay on your website with Splitit. The entire process happens within your user experience – there’s no need to click out of your checkout onto a third-party platform or fill out long, detail-heavy forms.

Klarna maintains its third-party branding across the entire user journey. If customers choose Klarna in the checkout, they’ll see a pop-up window where they’ll enter their personal details and undergo a credit check (soft credit check for Pay in 4 and Pay in 30 days and hard credit check for Klarna financing). 

Splitit vs Klarna: Which is better?

Don’t ask us – ask your customers! With Splitit, they can avoid late fees and additional interest on their credit card. There’s no need to take out a new line of credit or trigger any impact to their credit profile. They can make large purchases and repay at a pace that suits their budget and lifestyle. 

For retailers, that looks like an AOV of $1,200+ an improved conversion rate by 30% and the highest approval rates in the industry, 80%+.

If you’re looking to differentiate your brand from other sites, Splitit is the only white-label BNPL option that uses consumers’ existing credit cards. This means you can integrate it into your brand and create a clean, simple, and seamless experience, which can boost customer satisfaction. If you feel there’s a need to offer multiple BNPL solutions, having one less logo in the checkout creates an opportunity to cut down the noise on your site.

It’s also about looking ahead at identifying the goals for growth. Splitit’s global structure means it’s easy to access different markets via a single API, so you can scale BNPL alongside your international strategy.

Putting all these pieces together, it’s about finding a solution that works for customers now and lines up with where your business is moving in the future. 

Get in touch with our team to learn about how Splitit factors into this journey. 

Got more thinking to do? Explore Splitit vs Affirm and Splitit vs Afterpay. 

Information correct at time of publishing, source: Klarna.com and Productmint.com