The news: Klarna expanded its partnership with account-to-account (A2A) payments provider GoCardless so its US users can make payments from their bank account, per a press release. The A2A solution is available for Pay in 4 and Klarna financing, the provider’s long-term credit option.
The threat to card players: Letting users pay directly from their bank accounts minimizes their reliance on cards, which could lead to less volume—and revenues—for networks and issuers.
Klarna’s A2A integration reflects a broader battle for consumer spending between credit card issuers and BNPL providers. BNPL players are attracting customers with their interest-free installment solutions: 36.9% of US consumers who used BNPL said they wanted to avoid credit card interest, according to The Motley Fool. In response to the BNPL threat, many issuers (like US Bank) have come up with their own flexible payment options.
Klarna’s opportunity: The A2A solution benefits Klarna in three key ways.
Related content: Check out the section titled “How BNPL Solutions Are Threatening Credit Card Stakeholders” in “The Buy Now, Pay Later Report” to learn more about competition between card issuers and BNPL providers.