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Key takeaways
- Klarna, which offers buy now, pay later services, plans to launch a membership program in the US that it sees as an alternative to high-end credit cards such as the American Express Platinum or Chase Sapphire Reserve cards.
- The Premium and Max programs will give users access to more than a dozen subscriptions, cash back and other perks.
Klarna is playing in the premium credit card segment.
Buy now, pay later (BNPL) announced Monday the rollout of alternatives to high-end credit cards in Europe, a business in which banks compete for consumers who pay hundreds of dollars in annual fees for access to airport lounges, restaurant concessions and other benefits. A Klarna (KLAR) spokeswoman said it will extend its $18-per-month Premium and $45-per-month Max membership programs to the U.S. later this year.
“For decades, exclusive perks like airport lounge access, concierge-style subscriptions, and premium travel insurance were only available to elite credit cardholders,” David Sandstrom, Klarna’s chief marketing officer, said in a statement. “With Klarna memberships, consumers can enjoy travel, lifestyle and digital experiences in one seamless plan, without the burden of credit-based rewards or hidden costs.”
Credit card issuers compete for discerning customers, improving the suite of benefits they offer — and increasing the fees they charge to access them. Lenders have gotten creative with perks, adding everything from pet insurance to discounted NASCAR tickets.
What this means for consumers
Klarna and Citigroup use a third party to give members and credit card users access to airport lounges. As companies compete for premium credit card customers by building in these types of benefits, airport lounges may become more crowded and less attractive. Meanwhile, Klarna’s latest offering shows that it’s not just the big banks that are looking to lure consumers to the benefits.
American Express (AXP) has quadrupled restaurant credits and boosted other perks on its Platinum card while raising its annual fee from $695 to $895. JPMorgan Chase (JPM) has made the rewards system more generous for its Sapphire Reserve card while increasing the annual fee from $550 to $795.
Citigroup (C) recently launched its premium card, Strata Elite. Like Klarna’s membership offer, it doesn’t come with access to the kind of branded airport lounges offered by Capital One (COF) and Chase.
Klarna’s premium membership costs approximately $220 per year and offers more than a dozen subscriptions, including media groups such as Condé Nast and The New York Times, fitness and beauty company ClassPass and laundry service provider Laundryheap. Members also get 0.5% cashback when paying with Klarna Balance, a product for holding money, making and receiving payments offered in partnership with WebBank, Klarna said.
Max’s program costs about $540 per year. In addition to subscriptions, Max members get travel and car rental insurance, 1% cash back when using Klarna Balance, and access to hundreds of airport lounges through LoungeKey, Klarna said.
The program is Klarna’s latest attempt to get users to sign up for traditional banking products. About 1.2 million Americans use the Balance app, which is modeled after a bank account and is offered in partnership with an FDIC-insured institution.
Shares of Klarna, which went public last month, recently rose nearly 4%.
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