A New Way to Pay for Stuff Online With No Credit Card Needed

Online retailer Overstock.com has started testing a new checkout service from the Swedish firm Klarna, which essentially creates a method for eCommerce companies to send products to customers without getting paid — at least not right away. This is just one of the latest emerging ecommerce trends that are transforming the industry at an impressive rate.

With Klarna, consumers can make a purchase from Overstock simply by typing their email address, their shipping address, or possibly their phone number. However, no credit card is required. And, no, this has nothing to do with virtual currencies. It arose from a desire to find a pos system that’s good at inventory management, and streamline the entire process.
Klarna’s strategy is to make eCommerce as quick and painless as possible for both consumers and merchants.
Overstock CEO Patrick Byrne says his company has seen an increase in sales on mobile devices. “It saves you from having to key a lot of stuff into your phone,” he told Slate.com.
Byrne said he projects that Klarna will account for $100 million in sales next year for Overstock, a company that reported $1.5 billion in revenue in 2014.
Founded in Sweden 10 years ago, Klarna is making headway across Northern Europe, were the company fuels about 10 percent of eCommerce. In home country Sweden, it handles more than 30 percent. This past week, Klarna officially launched in the U.S. Klarna says it has already signed 15 American customers, including Overstock, offering payment gateway integration services for eCommerce websites, big and small.
How does Klarna streamline eCommerce without credit card information? Klarna decides if it can extend you some credit, after sifting through public and private consumer data. If you qualify, it gives you 14 days (and an additional grace period) to pay your bill.
This method has proven very popular in European countries like Germany, where few consumers use credit cards.
Klarna does use credit card information at some point. It’s checkout service includes accepting credit cards. Users can enter credit card information tied to their email address.
The bottom line, says Klarna CEO Sebastian Siemiatkowski, is to simplify the online purchasing process for consumers. “There is still too much much friction with payments, too many steps, too much stuff you have to enter,” he told Slate.

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