The news: Klarna launched its premium membership model in the US, per press release.

Klarna debuted its Premium and Max membership tiers in Europe back in October, building on its Core and Plus plans.

What the membership tiers include:

• Premium. For $19.99/month, members receive 1.5% cash back, global travel protection, and subscriptions to publications like The New York Times and Condé Nast. Cardholders can also get a 16g metal card in silver or black.
• Max. For $44.99/month, members get 2% cash back; comprehensive travel, rental car, and cancel-for-any-reason protection; and unlimited lounge access through LoungeKey Pass. Cardholders can also upgrade to a 16g rose gold metal card.

Cash back offers can be redeemed through partners like Air France-KLM, British Airways, SAS, Global Hotel Alliance, and Wyndham.

Why this matters: Klarna has been trying to compete with premium credit card rewards as a buy now, pay later (BNPL) provider, including through “gift”-style rewards with Nift. 

Elite membership tiers help the Swedish fintech level up its rewards offerings into categories like travel and hospitality—staples of credit card rewards—and piggyback on the success of the US launch of Klarna Card, which has netted 1.4 million sign-ups since June.

Will it be competitive? Most likely, no. The cash-back rates for both tiers are paltry compared with credit cards, which often offer 2% cash back for all purchases with no annual fee. 

Klarna, on the other hand, is asking consumers to fork over $539.88 yearly for its most premium tier—nearly neck-and-neck with Citi’s Strata Elite card, which gives cardholders much more competitive travel, hospitality, and dining benefits.

Our take: Klarna reported 1 million sign-ups for its memberships in its most recent earnings, suggesting that some European users found tiers to be cost-effective. It is likely that Klarna’s more affordable tiers have gained traction—coupled with the fact that reward-heavy credit cards are not nearly as common in Europe as they are in the US. 

BNPL rivals should make using installment loans for big-ticket items—a key growth area for providers—as easy as possible, like by offering 0% interest holidays, instead of promoting toothless rewards structures. For issuers offering card-linked installments, hammering home their flexibility with the added benefit of credit card rewards will be valuable to secure consumer loyalty, especially for Gen Zers who are dubious of credit cards.