Klarna is sunsetting its rewards program as it rolls out a new physical card

At the same time, Klarna is opening up a U.S. waitlist for its Klarna Card, which has already rolled out in Europe. Shoppers can use the card online or in-store — regardless of whether the retailer is a Klarna partner — and receive up to 10% cashback. They can pay off their balance monthly without interest, or pay over time with interest.

“As part of our ongoing efforts to create a smooth shopping experience for our customers, we will be sunsetting the Klarna Rewards Club to leave room for something even better,” said a Klarna spokesperson in a statement to Modern Retail. “Klarna’s new cashback feature will offer even more value to customers, allowing them to earn up to 10% cashback when using the new Klarna Card, or our One-time Card, through the Klarna app.”

Klarna announced the card rollout in a press release on April 17, but didn’t disclose the decision to unwind its rewards club. It declined an interview request from Modern Retail to further explain its decision to end the program. But its communications to customers about the shift say it’s planning “something new and exciting” in exchange of the rewards.

Klarna’s move from rewards club to cashback points to a growing trend among these platforms. It’s the third buy now, pay later platform to sunset its rewards program this year — Afterpay closed its Pulse rewards program at the end of January and Affirm discontinued its rewards program in early February.

Now, these companies are still experimenting with different ways to incentivize repeat purchases. For example, Afterpay partnered up with gifting platform Nift beginning in October 2023. That program allows shoppers to pick free items or discounts after making a second on-time payment. For its part, Australian payment company Zip has a rewards program that can be swapped for a statement credit or used as Qantas points for frequent flyers of the airline.

But the incentive programs are just one way that fintech platforms are trying to position themselves as more than just a checkout button for BNPL services. Eric Anderson, director of payments at e-commerce payment solutions firm Radial, said BNPL companies are increasingly introducing new traditional banking products like Klarna’s cards, or Affirm’s recently rebranded savings account service, Affirm Money.

“It’s more about trying to expand their services now that they’ve settled in,” Anderson said. “They’re trying to become the wallet instead of a BNPL, and they’re all moving in that direction.”

Compared to a card that can be used across merchants, adding up rewards over time may not make much sense. John Howard, co-founder and CEO of fintech platform Croissant, said its possible that BNPL companies over-estimated how many people may be interested in making repeat purchases with their provider. “People are not really going out of their way to shop Klarna when Afterpay or Affirm as an option,” he said.

Moving forward, a payment card that’s more flexible may hold a different appeal. Roger Williams, head of loyalty at Marigold relationship marketing firm, said rewards programs that offer points are losing their appeal in favor of more personalized offerings. In the case of Klarna, it’s now offering flexible payment schedules.

“Traditional rewards, whatever category you want to look at, cash back or discounts have hit the ceiling,” he said.

There are also deeper benefits to be had for Klarna. Instead of solely getting a commission or transaction fee off a purchase and giving rewards, the card allows it to also receive processing fees. If the purchase is made in its app, it could also get another commission fee.

Bryce Deeney, founder of payment software company Equipifi, said he sees the physical cards as a precursor to other payment products that the fintech players are rolling out.

“These BNPL companies have been experimenting with different rewards and incentives for consumers to download their app,” he said. “But now that they have tens of millions of users, they’re trying to drive commerce embedded inside of their app, so they can have the higher revenue stream.”

While Affirm has yet to launch a new loyalty product, its Affirm Card offers a debit card that can be used to pay for purchases at once or over time. There could be future developments on the horizon.

When asked about future rewards programs, an Affirms spokesperson told Modern Retail, “We’re constantly testing new features and looking for ways to improve Affirm’s products” The spokesperson added, “While Affirm’s Rewards beta program is no longer available, we are continuing to explore how we can bring a best-in-class rewards experience to our consumers.”

For Klarna, too, future updates are likely.

“We’re excited to share more as the feature rolls out in the coming months,” a Klarna spokesperson told Modern Retail.