Klarna enables end consumers to pay for their online orders using invoice, instant bank transfer, or installment payments. With invoice purchases in online shops, consumers receive the goods before payment, which provides security for consumers but entails the risk of payment default for merchants. Providers like Klarna allow customers to make invoice purchases and guarantee payment to merchants. With instant bank transfer, customers pay immediately upon placing the order and then receive their goods. Installment payments allow consumers to split the due amount into multiple installments and pay them over a longer period. Klarna’s installment payment does not differ from traditional installment plans, but it is processed directly through Klarna rather than a third-party bank collaborating with the shop.

For Merchants Klarna enables merchants to integrate invoice, instant bank transfer, and installment payment as payment methods in their online shops. The company assumes the risk of fraud and default. This means that Klarna pays the outstanding invoice amount to shop operators if a consumer has not paid their invoice within the deadline, including in cases of fraud. On the other hand, Klarna offers online shops a system called Klarna Checkout, where orders can be completed with just a few clicks. If the end consumer has previously paid with Klarna, details such as the billing address or date of birth are already stored and do not need to be manually entered. It is sufficient for consumers to enter their email address and postal code.