Shoppers in the United States may soon have a new way to pay for their online purchases. Last week, a Swedish-based company called Klarna joined forces with OverStock.com to allow shoppers to buy items without any upfront money or card payment.
Klarna is trying to simplify the buying process by asking buyers to enter only top-of-mind information such as an email address, shipping address and possibly a phone number to purchase items online. The company quickly processes that information to determine if they want to extend credit to you. If so, you have 14 days to make a payment on your account, plus an extended period after a late fee is applied to the charges. Failure to pay would result in actions from a collection agency.
Some merchants that have used Klarna claim their conversions have increased rather significantly.
European countries represent 10% of the world’s ecommerce transactions, and Klarna has become a popular way to make online payments in these countries. This marks the company's first move into the American market, where the payment processor hopes to expand rapidly during the next year.
"I would be disappointed if we didn't have hundreds of merchants on the platform doing millions of transactions as early as in 2016," Klarna's North America CEO Brian Billingsley told Reuters.
If this takes off in America as well as it has in Europe, it may be a threat to PayPal and similar online payment processors.