Are you looking for the best Buy Now, Pay Later (BNPL) payment provider for your online store? Providing a flexible, customer-focused payment gateway is essential. But it’s important to choose the right one.
Zilch and Klarna are two of the biggest brands in the BNPL space. Both companies have millions of customers and are used on thousands of websites. But which is best? To find out, we put Zilch vs Klarna to the test. We’ve compared these two BNPL brands on a range of factors, including the customer experience, fees, support and much more. You’ll know exactly which one is right for you by the end of this article.
| Zilch | Klarna | |
|---|---|---|
| Payment type | Four instalments | 3 instalments or pay after 30 days |
| Late fees | No | No |
| In-store purchases | Yes | Yes |
| Fees | Affiliate fee | Between 1.9% and 2.9% plus a flat rate of 20p |
| Merchant protection | No | Yes |
| Cross-border commerce | No | Yes (over 20 countries) |
| Integrations | N/a | Yes |
| Support | None for merchants | Help centre, email, live chat, phone |
| Trustpilot score | 4.6 | 4.8 |
Sections
Zilch vs Klarna: At a Glance
Zilch is a UK-based payment provider building a BNPL offering with a difference. Unlike other BNPL services, Zilch isn’t a payment gateway merchants add to their site. Rather, it’s a consumer-first financial product that works like a virtual credit card and can be used anywhere Mastercard is accepted. Instead of charging merchants a fee for their services, Zilch receives an affiliate commission bonus or charges consumers a small fee. As further proof of its consumer-friendly approach, Zilch is the first BNPL provider to be fully Financial Conduct Authority licensed.
Klarna is the brainchild of three Swedish entrepreneurs who founded the company while they were still students in 2005. Today, it’s the de facto leader in the BNPL space, boasting tens of millions of customers and hundreds of thousands of merchants.
Consumers can use Klarna to pay for items in three ways:
- Split payment into three instalments spread over 60 days.
- Delay the entire payment by 30 days.
- Get long-term financing for 36 months.
Merchants can add Klarna’s payment gateway to their checkout. It comes with an express checkout service like Apple Pay, as well as on-site messaging. Customers also get a physical Klarna card they can use in stores.
Major brands like adidas, ASOS and H&M use Klarna to improve their customer’s purchase experience.
The Customer Experience: How Does it Differ?
Understanding the customer experience of each BNPL is essential. It will decide whether your customers choose that payment option at checkout. In the case of Zilch vs Klarna, the customer experience varies quite a bit different. Allow us to explain.
How do customers pay?
Both brands let customers pay in instalments and shop online via an app. Klarna offers more payment methods, but Zilch lets customers use its services anywhere.
Zilch is a consumer-first BNPL provider, which means it serves consumers rather than merchants. As such, there’s no payment gateway to integrate with your checkout. Instead, Zilch customers get a virtual credit card they can use anywhere Mastercard is accepted. Customers can also shop directly through the Zilch app.
When paying with Zilch, customers split their purchase into four interest-free instalments. The first is due immediately at checkout. The second instalment is due two weeks later, the third four weeks later and the final instalment is due six weeks later.
Where Zilch has an affiliate agreement with merchants, there is no fee. In cases where it doesn’t, consumers will have to pay a small fee.
Klarna works in a different way. Because there is a payment gateway integration, customers can choose to pay with Klarna directly at checkout — and merchants will be charged a fee as a result. Alternatively, they can shop via the Klarna app or using a Klarna credit card in stores.
When making a purchase, consumers can choose to pay in three interest-free instalments or delay the entire payment by 30 days. Consumers can also pay subscription fees using the service.
Do they charge late fees?
Neither brand charges late fees.
Zilch promises never to charge consumers late fees or let late payments impact a consumer’s credit score.
Klarna also promises not to charge late fees on both their BNPL solutions. They may, however, transfer accounts to a debt collection agency if debts remain outstanding for several months.
Who can be a customer and do they run credit checks?
Both companies have similar customer requirements.
Zilch requires customers to be 18 or over and live in the UK.
Klarna requires customers to be 18 or over, live in the UK and have a positive credit history. Additional credit searches may be completed, but they won’t affect the customer’s credit score.
In-Store Purchases: Can Customers Use Clearpay or Klarna In-Store?
Customers can use both Zilch and Klarna to pay for items in brick-and-mortar retailers with ease.
Zilch’s virtual Mastercard means shoppers can use Zilch in any store where they can tap their smartphone. Where retailers don’t have an existing relationship with Zilch, customers will still be charged an additional fee. Where they do, it’s free for customers to use Zilch.
Klarna provides two in-store payment solutions: one similar to Zilch and one a little different. The similar solution is a physical payment card that can be tapped anywhere Visa is accepted. The different solution is to pay via a link that retailers can send via email, text or QR code. Customers then use their Klarna app to complete the purchase.
Fees: How Much Do Clearpay and Klarna Charge Merchants?
Neither Zilch nor Klarna states the fees they charge merchants on their sites. After a bit of digging, however, we’ve been able to estimate the amount Klarna charges merchants. Because Zilch works with merchants on an affiliate basis, however, their fee is a little more complicated.
Zilch works with retailers on an affiliate basis. If they agree an affiliate deal — usually a percentage commission of each sale — Zilch customers can shop there free of charge. If they don’t have an affiliate agreement, Zilch customers will be charged a small fee every time they shop.
Klarna charges aren’t clear, but we estimate they’re between 1.9% and 2.9%, plus a flat rate of 20p per transaction.
Both BNPL providers may have additional costs. Please confirm fees with each individual company.
Merchant Protection: How Much do Clearpay and Klarna Provide?
The additional protection BNPL providers can offer retailers is one of the best things about them. Klarna takes several steps to minimise payment risks. Zilch, however, doesn’t.
Zilch does not offer any additional protection to retailers because it only acts as a payment facilitator via Mastercard. There is no checkout integration, and the only agreement it strikes with merchants is an affiliate one.
Klarna claims to protect merchants from chargebacks and other forms of fraud as long as they comply with their Shipping Policy. Klarna’s credit searches, identity checks and in-house risk engine also mean payments are less likely to be fraudulent.
Global Payments: Can Clearpay or Klarna Help You Sell Abroad?
Only Klarna can help you reach international customers right now.
Zilch is only available in the UK at the time of writing. However, it may be available across Europe and the U.S. in the future.
Klarna operates in over 20 international markets, opening up your online store to BNPL customers around the world.
Integrations: What Platforms and Payment Processors Do They Integrate With?
Integration is essential if you’re looking to use either Zilch or Klarna on your online store. Klarna integrates with every major e-commerce platform, and Zilch doesn’t require any integration at all.
Zilch is retailer-agnostic, which means it works with any retailer, even if they don’t have an agreement in place. Because customers are using a Mastercard to make payments, your standard payment gateway is enough.
Klarna works with every major e-commerce platform, including the likes of Shopify, WooCommerce and Magento. You can find a list of all of their integrations here.
Support: What Customer Support Is Available?
Only Klarna supports merchants.
Zilch is retailer-agnostic, so it focuses on customers first. While there is an in-depth customer support centre for consumers, no support is offered to merchants.
Klarna offers considerable support to merchants. Online chat, email and phone support is available between 8.00 and 17.00 Monday to Friday, 10.00 to 18.00 on Saturday and 10.00 to 16.00 on Sunday. Klarna also has an online support resource and FAQ
Reviews: How Are Clearpay and Klarna Rated?
Both brands score incredibly well on Trustpilot.
Zilch is rated 4.6/5 from over 37,000 reviews.
Klarna is rated 4.5/5 from over 20,000 reviews.
Summing It Up
Klarna and Zilch are very different. One focuses on merchants, the other on customers. As such, it’s hard to give a fair verdict on which is better — especially because customers can still shop at your store without you having to sign up to Zilch.
If you care about offering a BNPL service, however, having Klarna at checkout is a surefire win. Customers know the brand and can choose to split or delay their payments in the heat of the moment. With Zilch, customers have to know they’re going to buy now and pay later prior to making a purchase.
Of course, there’s no reason you can’t integrate Klarna at checkout and strike up an affiliate agreement with Zilch to get the best of both worlds.