Dive Brief:
- Overstock.com is testing a reduced-friction payments system by Swedish payments processor Klarna that doesn’t require a credit card number upfront when customers checkout online.
- Klarna issues shoppers temporary credit using 200 variables based on public records, then offers 14 days to pay with a card or beginning a payment plan with 11.95% interest.
- Overstock reported an increase in mobile sales conversions after using the system, and expects sales completed through Klarna to reach $100 million next year.
Dive Insight:
Overstock is experimenting with a payments system that eliminates the need for a credit card during purchase.
Streamlining purchases by eliminating the amount of information users have to key in, Klarna already handles 10% of e-commerce transactions in Europe. The system is particularly popular in its home country and in Germany, where bank drafts are more popular than credit cards. Similar to Apple Pay and Android Pay, Klarna stores credit card information, enabling click-to-pay functions on mobile devices while also being useful on desktops.
Overstock has been a leader in testing new payments systems such as PayPal, whose PayPal Credit feature functions similarly to Klarna, and Bitcoin.