The news: Klarna revamped its membership rewards tiers for European users, per a press release, changes that are likely headed to the US as well.

• Membership tiers have been expanded to four options: Everywhere (formerly Core), Plus, Premium, and Max. 
• Users unlock fee-free buy now, pay later (BNPL) with Klarna Everywhere.
• Members can access more subscriptions, travel data, hotel status upgrades, lounge access, and UK-specific phone plans.
• And cash-back opportunities have been increased from 1% to 1.5% on every purchase with Klarna; cash back from partnering Klarna merchants can climb to four times the baseline in-app offer.

Zoom out: Klarna is trying to compete with issuers on travel and cash-back rewards. But the BNPL industry’s thinner margins make it harder to fund deep rewards.

Added membership fees could help, but even Klarna’s highest tiers pale in comparison to issuers’ perks at similar annualized rates. 

Implications for BNPL players: Membership rewards offering ample subscriptions and 1.5% cash back will likely connect better with European consumers already accustomed to more limited credit card rewards. Still, Klarna’s pitch of €44.99/mo for its Premium tier is asking a lot of European consumers: Over €500 ($576.57) in fees approaches US premium card annual fee levels with weaker rewards. 

US consumers are unlikely to bite. Shoppers earn 1.5% cash back on annual fee-free cash-back credit cards, making the concept of paying for weaker rewards not a winning combination.

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