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Klarna: Optimising the online experience Luke Griffiths, General Manager, Klarna UK


At Klarna, our mission is to make online payments simple, smooth and safe for retailers and shoppers. Retailers who partner with us can offer their customers our frictionless payment methods – Pay now, Pay later and Slice it. Our services translate into direct benefits for merchants – helping to boost loyalty, customer retention and, crucially, sales.

Pay now facilitates straightforward online payment purchases. It lets customers pay in full via Klarna’s speedy online checkout and gateway services using card or APM. It’s an attractive option for many of our merchant partners, as our checkout is proven to reduce abandoned baskets and provide a better user experience for shoppers.

Pay later is completely unique in the UK market and allows shoppers to “try before they buy”. Customers have either 14 or 30 days to pay for their goods after delivery, with no interest or fees – or they can return the items if they’re not what they expected. The merchant however is paid immediately. Pay later is a real differentiator for merchants and those that offer the payment method have seen an average increase of 15% in basket value and 20% increase in basket size. It also has the potential to dramatically reduce a merchant’s customer service enquiries, from customers chasing refund payments or adjustments to returned goods, as no money leaves their account.

Finally, Slice it allows customers to spread the cost of their purchases into equal monthly instalments, giving them flexibility and increased purchasing power right when they need it – at the point of sale. Klarna’s approach to online consumer finance is very different from that of traditional providers – we have no redirects, a simple 4-step application process and real-time decisioning – which means it’s easier and more accessible to shoppers.


Fuelled by the boom in technology and the way we use the internet, people’s shopping habits have changed dramatically over the past decade. This has led to the UK ecommerce market now being worth over £133bn, according to the January 2017 IMRG Capgemini eRetail Sales Index.

Gone are the days when shopping was a 9 to 5 activity done on the high street. Shoppers today can visit their favourite brands 24 hours a day, and make their purchases from the comfort of their own homes – offering a huge range of opportunities for retailers across all sectors.

To make the most of it, retailers need to ensure they are providing channel responsive messaging and functionality for customers shopping on mobile – whether by offering mobile optimised design, tailored offers or punchier content. It’s also crucial that they make both the buying and paying experience as painless as possible. After all, the more hoops a customer has to jump through, the less likely they are to make it to the confirmation page.


As well as having many benefits, the ‘always on’ nature of ecommerce has put a huge amount of additional pressure on retailers to keep up with the competition as demand for user-friendly websites and cross-device accessibility continues to grow.

One of the problems plaguing online retailers is the dropped basket dilemma, where consumers drop out of the buying or checkout process before completing their purchase. Research by Klarna found that over 68% of consumers have abandoned an online shopping basket – costing each British e-tailer an average total value of £37,062 per year. Many of these dropped baskets occur at the checkout, as consumers lose patience over lengthy checkout processes and being redirected – so perfecting and simplifying the payment process is a key way to combat lost sales.

Our research has also showed that 41% of UK online shoppers say that they order multiple items to try on at home. With Klarna’s Pay later, it’s easy for consumers to turn their sitting rooms into fitting rooms.

Key, then, is also offering a seamless way to manage returns. One of the biggest hassles around returns is the effect it has on customers’ cash flow – introducing Pay later is an easy way to counteract this –no more worries about refunds – and build customer loyalty.


Emotions play a huge role in the entire consumer journey – from browsing to moment of purchase. Factors ranging from excitement and impulsiveness to anxiety and guilt all influence the customer journey.

Frustration is felt particularly keenly at the checkout. Recent research we conducted showed that one in four are frustrated when the checkout doesn’t remember their details, and one in four millennials say they are more likely to complete a purchase if one-click payments are in place. These extremes of emotion must be navigated carefully so retailers can effectively guide shoppers through the purchase process.


By reinventing customer service and user experience, the emergence of fintech companies has had an important role to play in the changing retail environment. As more and more e-tailers look to boost their customers’ shopping experience, we can expect closer collaboration between the two sectors to further perfect and adapt the payments process.

Until recently, our main focus has been helping retailers and consumers in the fashion space with our flexible portfolio of payment solutions. Fashion remains at the heart of the business, but in 2018 we’ll be expanding into other sectors – to help merchants in the consumer electronics, sports, and home sectors offer more flexible payment and financing options on bigger ticket purchases.


We’ve seen the Pay later proposition really resonate with fashion-conscious millennials. As digital natives, shopping online is second nature for them. But the beauty of our range of payment solutions is that they are designed to suit everyone and every situation.

Customer Case Study

As one of the world’s leading fashion retailers – both online and in-store – Arcadia constantly pushes the boundaries of innovation and consumer convenience. The group includes several high street brands, including Topshop , Topman , Miss Selfridge , Dorothy Perkins and Evans . But the group is plagued with the same issue as all other merchants: how can it reduce the rate of dropped baskets, and make sure its consumers enjoy an efficient and speedy payment experience across all its online offerings?

Klarna came in to help solve this dilemma, and their partnership was launched in September 2016. In fact, Arcadia Group was the first retailer in the UK to introduce online consumer finance through Klarna. This allows online shoppers to quickly and securely move from checkout to purchase, and be offered the option of instant credit. That means shoppers have the freedom and control to buy immediately while spreading payments over time, interest free. And unlike other consumer financing applications, Klarna is streamlined to only a few steps, with minimal information gathered from the shopper.

With an easy IT integration into the existing Arcadia payment flow, Klarna was able to help boost business in just a few months. As a result, Arcadia has been able to improve consumer purchasing power and increased AOV by 80% when compared to other payment types. Klarna also handles the customer risk, so Arcadia always gets paid immediately for goods purchased.

Based on this success, Arcadia recently expanded their partnership with Klarna to offer Pay later across all their brands. This allows shoppers to try goods before they pay, and they have 30 days interest-free to pay for whatever items they’d like to keep.

Both the Pay later and Slice it options allow shoppers to place an order entering only a few personal details, and data is saved so shoppers can experience an entirely frictionless checkout when they make repeat purchases. By offering such payment options, Arcadia is able to appeal to their key millennial audience – and offering Klarna payments cements the fashion giant’s position as a leader in the ecommerce space. Klarna and Arcadia Group recently won Payments Partnership of the Year at the Retail Systems Awards 2017.

Klarna in brief:

Company founded: Klarna was founded in 2005 in Stockholm, Sweden

Global reach: Active in 18 countries, Klarna offers payment solutions to more than 60 million users in Europe and North America.

Customers: Klarna works with 70,000 merchants globally. Clients in the UK include ASOS , Topshop, Topman, Miss Selfridge, JD Sports , size? , Finery, Schuh and many others.

Employees: 1,500

Contact: For further information, visit or contact us via

This Company Spotlight was produced by InternetRetailing and sponsored by Klarna. Funding articles in this way allows us to explore topics and present relevant services and information that we believe our readers will find of interest.

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