The news: The buy now, pay later (BNPL) giant added a Pay Now option to its US checkout experience so customers can pay in full wherever Klarna is accepted, per a press release.

Klarna will also introduce the Klarna Card—which lets users pay in installments in-store and online—to the US market “very soon.” The Klarna Card integrates into the Klarna app and is connected with its loyalty program, Vibe.

How we got here: Both the Pay Now feature and the Klarna Card are already available in much of the company’s European market: 50% of Klarna’s European volume comes from PayNow, per TechCrunch. And in October, Klarna brought Pay Now to the UK as part of its operational changes to mitigate BNPL scrutiny.

The US expansion feeds into the BNPL player’s transformation from a payments platform into an end-to-end shopping hub:

• Earlier this month, Klarna launched its super app, which consolidates shopping, payment management, and support for products, delivery, and returns. Adding Pay Now expands its checkout functionality so US consumers can use Klarna for all purchases, whether they want to use BNPL or not.
• This opens up Klarna to a huge new volume opportunity. And launching the card will help Klarna move closer to an all-in-one payments company, which can strengthen users’ loyalty to the brand.

Our take: As part of Insider Intelligence’s Top Ten Trends for 2022, we predicted that Klarna’s UK overhaul would signal what’s to come.

Offering Pay Now helps mitigate mounting concerns about the financial risks involved with BNPL and get ahead of regulators: More than half of US BNPL users have missed a payment, per a July 2021 Marqeta study conducted in partnership with Propeller Insights.

Looking forward: Adding new checkout capabilities opens Klarna up to capturing more retail sales ahead of the holiday season.

• Total US holiday retail and ecommerce sales are projected to hit $1.092 trillion this year, according to eMarketer forecasts from Insider Intelligence.
• And 30% of consumers plan to stretch their holiday budgets using BNPL offerings, per Deloitte’s annual holiday retail survey. Given Klarna’s reach in the country—the number of US Klarna users is expected to hit 21.9 million in 2021, per our forecasts—the holiday season presents a large growth opportunity for the firm.