More on this: Klarna’s rewards program, which it launched in Australia and the US in 2020, lets customers earn points when they make on-time payments. Points can be redeemed at brands in the Klarna app. The BNPL provider also introduced “Missions”—small tasks that users can complete to earn points and discover different features in the app.

Pay Now has already been available in the US and the UK and lets customers make payments in full. It’s part of Klarna's wider plan to create a consistent, simplified checkout flow for customers—Klarna also added a review screen that gives customers an overview of their order, installment plan, and chosen payment method.

Klarna’s opportunity: The provider can use the rollouts to tighten customer relationships.

• Expanding Pay Now could help Klarna mitigate financial concerns related to BNPL. Letting customers pay their balances immediately might help decrease the chances of missed payments—an issue regulators have been investigating. Pay Now can help increase flexibility by letting customers pay when it's convenient for them.
• Making its rewards program more widely available can increase Klarna’s customer engagement. The program can encourage spending and it may also decrease the likelihood of missed or late payments by rewarding customers for on-time payments. The program also helps Klarna stay top of mind for customers: Klarna was the 10th-most-downloaded shopping app in the US last year, per Apptopia, and the provider's rewards program likely helped it achieve this.

The bigger picture: Klarna’s not alone in beefing up app features to help bolster customer and merchant loyalty.

• Australia-based Zip is also using its app to boost loyalty and spending. It recently launched a feature that lets merchants showcase their latest deals in the home screen of the Zip app. This could make customers who want to take advantage of promotions more likely to spend on the app.
• As competition grows more intense, BNPL incumbents like Klarna and Zip are facing tighter profitability pressures. This might be what’s driving them to branch out: Last month, Klarna launched physical cards in the UK, and a year ago, it introduced bank accounts in Germany.

Related content: Check out our Q&A with Sezzle’s co-founder and president to learn more about tactics that BNPL providers are using to boost customer engagement.