Klarna Launches Open Banking Settlements in the UK

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AI-enabled payments network and shopping assistant Klarna has unveiled plans to introduce Open Banking-powered settlements in the UK.

The initiative aims to enable consumers to make payments directly from their bank accounts, bypassing traditional debit card networks. This move signifies Klarna’s commitment to enhancing its payment network while offering consumers a streamlined and secure payment experience.

Initially, Klarna will roll out Open Banking settlements for its Pay Now instant payment option, with plans to extend this feature to Pay in 20 and Pay in 3 options later in 2024. With approximately 18 million customers in the UK, Klarna’s introduction of Open Banking settlements is poised to significantly increase the adoption of this payment method in the region, where around 5 million individuals already utilize Open Banking payments monthly.

For consumers, Open Banking settlements offer a convenient and secure payment method, eliminating the need to input payment details on unfamiliar retailer websites. Instead, users can simply click on ‘Pay by bank’ and complete the payment securely through their mobile banking app.

In addition to offering a seamless payment experience, linking bank accounts to Klarna provides consumers with insights into their spending within the Klarna app and access to budgeting tools. Moreover, sharing bank data allows Klarna to make more informed lending decisions based on users’ real spending habits, ensuring compatibility with their budgets.

Klarna views Open Banking as an opportunity to reduce payment costs by bypassing traditional card networks and leveraging up-to-date bank account information for lending decisions. The company has already seen success with this feature in ten other European countries and expects similar results in the UK.

By embracing Open Banking, Klarna not only strengthens its offering but also supports the broader adoption of Open Banking in the UK. Globally, Pay Now by bank is available in ten countries and utilized by over 20 million consumers each month, according to Klarna’s data.