Buy Now Pay Later with Klarna for Subscription Billing

The subscription model is designed for making purchases more convenient. Customers pay small amounts upfront on a recurring basis, and enjoy services for lengthy durations. They don’t have to pay hefty one-time fees, and make a huge purchase.

Klarna’s buy now pay later (BNPL) model takes this customer convenience to the next level. If subscription businesses offer BNPL to their customers, they allow them to further split their total charges into smaller payments.

The BNPL and subscription billing partnership is powerful, and helps businesses boost their customer lifetime value. SubscriptionFlow is a leading software in this scenario, helping businesses access the benefits this partnership brings.

So let’s find out how Klarna’s BNPL and subscription billing work together. Let’s also explore how SubscriptionFlow makes this collaboration work seamlessly.

Overview of Buy Now Pay Later with Klarna

Klarna is a payment service provider famous due to its BNPL services. It facilitates costly purchases by letting users pay in instalments, or at a later date. Klarna also helps ecommerce businesses manage customer payments. It provides their customers with these options:

Payment in 4 equal installments charged every 2 weeks. These are interest-free.

Full payment in 30 days. Customers can pay back in full without relying on instalments.

Customizable financing. Customers can pay back over longer periods via direct debit. They have to pay interest in this case. Each customer’s interest rate and eligibility for this option varies according to their situation.

Here is how Klarna works: Businesses sign up with Klarna using its Merchant Portal. They provide their required business information and then accept the platform’s terms and conditions. These terms mention the charges that businesses can be subjected to during their service period.

Charges differ according to the business’s region, and the BNPL service their customers choose to use. Once merchants complete sign up, they are given access to their business accounts. They can then integrate Klarna’s payment solutions with their websites or e-commerce stores.

Klarna allows them to process transactions, and manage accounts for customers. Businesses can also use their login details to the Klarna Merchant Portal for the Klarna app. Klarna’s app makes it convenient for them to monitor customer payments, and respond to customer queries.

Why Integrate Klarna’s BNPL with Subscription Billing?

The subscription model is already actively responding to the customer demand for payment flexibility. Subscription billing now follows a number of models that meet the evolving customer and business needs. Some of these models are pay-per-use, volume and tiered pricing.

However, many subscription businesses, especially those that deliver physical products, and memberships, still rely on standard subscription billing. By standard, it means that these businesses charge subscription fees upfront. Monthly subscriptions are currently dominating the field, where customers are required to pay upfront every month.

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Not all customers are happy paying in advance on a recurring basis. Even though subscription costs are generally customer-friendly, they might not be affordable for all customers. That is where Klarna’s BNPL options come in.

Klarna dominates the buy now pay later arena with its budget friendly, and trustworthy solutions. Subscription businesses can incorporate the flexibility offered by BNPL into their billing processes, as this paves the way for better customer acquisition. Here are the major reasons why this collaboration is impactful:

Higher Customer Acquisition Rate

Customers feel more confident investing in subscriptions that give them more time to pay. Integrated with Klarna, businesses can offer customers easy instalment plans. These plans ensure that users don’t have to pay the entire subscription cost upfront.

Instead, they allow customers to divide their charges into smaller and more manageable amounts. Subscribers can easily pay off their charges over a few weeks in this way.

It is less taxing on their pockets, and lowers the entry barrier for subscription too, encouraging more sign ups. The more sign ups, the higher a business’s acquisition rate.

Higher Customer Lifetime Value

Customers can not only subscribe to a service conveniently, but they can continue using the service with the BNPL option at their disposal. They can pay for subscription renewals upfront if they wish to. They can also split the cost for some cycles using Klarna. The choice is theirs to make.

Offering BNPL choices to subscribers makes them feel in control of the way they pay. They can also utilize this option throughout their subscription lifecycle whenever needed. This strengthens retention, as customers don’t have to worry about paying for their renewals the standard way.

Steady Revenue

By offering buy now pay later with Klarna, businesses can steady their revenue streams. That is because they don’t have to manage customers’ instalments themselves. Klarna does it for them. Whenever customers choose to renew subscription first, and pay for it later, businesses still timely receive their payment in full.

Klarna acts as a buffer in this case, as it pays the business on behalf of the customer, and then manages the pending payment itself. The business doesn’t have to wait for the customer to complete their payment. It also doesn’t have to suffer any losses due to delayed or missed payments.

Klarna takes this responsibility instead, and it minimizes chances for failed payments as well. That is because customers pay via Klarna, and not directly through their own cards. This reduces chances of payment failure that can occur due to card issues such as expiration.

This mechanism enables businesses to establish consistent revenue, as Klarna becomes an effective intermediary between them and customer payments. There are lesser payment risks involved, so merchants continue receiving recurring payments smoothly.

SubscriptionFlow-Klarna Integration for Perfect BNPL & Subscription Billing Synergy

Offering Klarna as a payment option for subscription sounds tempting. However, it requires an efficient subscription billing system to make this strategy work effectively.

SubscriptionFlow offers merchants the right solution, as it integrates with Klarna seamlessly. It connects them to renowned payment gateways that support Klarna, such as Stripe, Adyen, and Worldpay.

With SubscriptionFlow, merchants can easily enable Klarna as a payment method on their checkouts. They can also utilize SubscriptionFlow’s custom checkout for more automation and faster operations. Once Klarna is enabled, businesses can sit back and receive frictionless customer payments through it.

Here is how the process works:

Customers complete their sign up and progress to checkout page
At checkout, they choose Klarna to pay
Klarna gives them various BNPL options
Customers choose a suitable option according to their plan’s charges and duration
Their subscription costs are split based on their instalment option
Customers successfully subscribe with peace of mind
Merchants receive subscription payment in full, and Klarna collects the remaining payment on the agreed terms on its own

While Klarna sees to payment collection, SubscriptionFlow ensures seamless billing cycles. SubscriptionFlow handles billing end to end—from tracking billing schedules to automating invoice creation and transfer, to managing payment adjustments. This leaves no room for billing inefficiencies.

What You Get by Using Klarna with SubscriptionFlow

This integration paves the way for smooth billing cycles, and ensures benefits for both merchants, and customers. Here are some of those:

Easier Entry into Lengthy Plans

Long-term subscription plans such as annual, six-month, or quarterly plans can have pricey upfront costs. By adopting Klarna’s BNPL solution with SubscriptionFlow, businesses can help customers secure these plans without extensive budget planning beforehand.

Customers can easily pay for their plans’ expenses in smaller chunks over weeks, and even months adhering to Klarna’s policies. They no longer have to feel conflicted about investing in long-term plans and paying for them all at once.

Smart Dunning by SubscriptionFlow

SubscriptionFlow gives your customers the choice to pay via Klarna whenever they feel the need. They can choose to pay via a variety of other payment options that the system supports as well. When customers pay using Klarna, it eliminates the risk of payment failure for businesses.

That’s because Klarna takes that risk for businesses and manages customers’ payments itself. But if customers choose to pay using other methods for some of their cycles, the payment failure risk resurfaces. That’s where SubscriptionFlow steps in to offer your revenue much-needed protection.

When payment fails, SubscriptionFlow automates payment retries to maximize revenue recovery. It also enables businesses to automate payment reminders for customers, as well as send personalized dunning emails.

Easy Renewals

SubscriptionFlow automates renewals so that customers enjoy uninterrupted subscriptions. They don’t have to put in manual effort to pay each time.

But, if customers use Klarna for their first subscription payment, they are given the choice to either use Klarna or other payment methods for the next payment. This means that their payments are not auto-collected.

Customers can be given checkout links in their portals where they can choose to pay with Klarna again, or with other options. This gives them increased control over their payments. If they choose an option other than Klarna, they can switch to auto-recurring payments too.

Revenue Growth Opportunities

Klarna is widely popular among customers across multiple regions, such as the US and Europe. It is increasingly becoming a part of users’ daily transactions. Users are relying on Klarna to pay for even the most basic of their purchases such as groceries.

That is why using Klarna with SubscriptionFlow is a game changer for businesses. It helps merchants tap into potential markets, and gain subscribers that put convenient budgeting above all else. This unlocks new revenue opportunities, and ensures that businesses don’t miss out on what’s trending among customers.

The SubscriptionFlow-Klarna integration offers merchants right what they need: automated billing cycles, sustainable revenue, and customer satisfaction. Book a demo today, and join successful businesses already leveraging this integration.