Key Takeaways
- The buy now, pay later provider Klarna plans to launch a membership program in the U.S. that it sees as an alternative to high-end credit cards like the American Express Platinum or Chase Sapphire Reserve cards.
- Its Premium and Max programs will give users access to more than a dozen subscriptions, cash back and other perks.
Klarna is making a play for the premium credit card segment.
The buy now, pay later (BNPL) company on Monday announced the European roll-out of alternatives to high-end credit cards, a business in which banks are competing for consumers who pay annual fees in the hundreds of dollars in exchange for access to airport lounges, restaurant perks and other benefits. Klarna (KLAR) will extend its $18-a-month Premium and $45-a-month Max membership programs to the U.S. later this year, a spokeswoman said.
“For decades, exclusive perks such as airport lounge access, concierge-style subscriptions, and premium travel insurance were only available to elite credit card holders,” Klarna’s chief marketing officer David Sandström said in a statement. “Through 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 are vying for the premium clientele, sweetening the suite of benefits they offer—and hiking the fees they charge to access them. Lenders are getting creative with perks, adding everything from pet insurance to discounted Nascar tickets.
What This Means for Consumers
Klarna and Citigroup are using a third party to give members and credit card users access to airport lounges. As companies vie for premium credit card customers by building up these sorts of benefits, airport lounges may get more crowded and less desirable. Meanwhile, Klarna’s newest offering shows that it’s not just the big banks that are looking to hook consumers on benefits.
American Express (AXP) quadrupled restaurant credits and enhanced other perks on its Platinum card while raising its annual fee from $695 to $895. JPMorgan Chase (JPM) made the reward system more generous for its Sapphire Reserve card while increasing annual fees from $550 to $795.
And Citigroup (C) recently launched its own premium card, Strata Elite. Like Klarna’s membership offering, its doesn’t come with access to the sort of branded airport lounges offered by Capital One (COF) and Chase.
Klarna’s Premium membership costs nearly $220 annually and offers more than a dozen subscriptions, including to media groups, such as Condé Nast and The New York Times, the fitness and beauty company ClassPass and laundry service provider Laundryheap. Members also get 0.5% cash back when paying with Klarna Balance, a product for holding funds and making and receiving payments that is offered in partnership with WebBank, Klarna said.
The Max program costs about $540 annually. In addition to the subscriptions, Max members get travel and rental-car 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 its take on traditional bank products. About 1.2 million Americans use Balance, which is modeled after the bank account and offered in partnership with an FDIC-insured institution.
Shares of Klarna, which went public last month, were recently up nearly 4%.
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