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Post by Aileen Sim:
Idea series: Mahjong Matchmaker!View Post on Quora
How Klarna works.
Answer by Aileen Sim:
How it works:
Klarna allows users to make purchases online without providing their payment details to the merchants.
- User provides national ID number (e.g. SSN) at checkout
- Klarna does a micro-credit check with the ID number, fronts the money and pays the merchant first.
- User receives goods, and a Klarna invoice with 14 days to pay via credit cards, bank transfers, cheques etc.
The primary benefit of Klarna is this: Removing the payment step greatly reduces friction in the checkout process.
This reduces “cart abandon” rate for merchants. i.e. more people buy.
The Klarna magic - What makes Klarna work:
Easy availability of an individual’s information.
In Sweden, with a user’s ID number, Klarna can obtain..
- User’s address - This allows Klarna to pre-fill the user’s address, therefore creating an even easier checkout experience.
- User’s credit rating (similar to FICO) to assess his credit worthiness.
Effective fraud prevention:
- Goods can be shipped only to the ID’s registered address - prevents fraud from identity theft / stolen ID numbers.
- Defaults are reported to the national credit bureau. Similarly to FICO, a bad credit score can have a long-term impact on one’s ability to get a mortgage and credit. This prevents users from defaulting on their payments.
Klarna owns the “entire stack”:
- Klarna issues the credit to users - usually the most profitable piece in a credit card transaction - at 20-30% p.a.
- Klarna is able to eventually switch users from more expensive payment methods (e.g. credit cards) towards cheaper methods (e.g. cheques, bank transfers). This lets them reduce payment collection cost, whilst still charging merchants 3%.
Klarna’s business model:
- Fees to merchants
- Fees to users
- Interest charged to users
Their primary COGS:
- Cost of capital - for funds needed to issue credit
- Payment collection costs - cost of processing credit cards and bank transfers
- Cost of default / bad debts - consumers who fail to pay up. Klarna insures the merchants against bad debts.
More details on Klarna’s revenue streams:
Note: Fees vary with the specific products and countries. Some of these numbers may be out-of-date but should be indicative.
1. Fees to merchants
- Set up fee:
Certain products like the new has a set up fee of 3995 SEK (613.59 USD), which is currently being waived.
- Monthly fee:
599 SEK (92 USD) per month for Klarna Checkout
- Per transaction fee:
1.5% - 3% per transaction
2. Fees to users:
- Late fee / reminder fee:
- 60 SEK (9 USD) in Sweden. 135 SEK for larger outstanding balances.
- 9.95 EUR in Germany
- Fees for their installment product:
- 29 SEK (4.50 USD) one-time fee in Sweden
- 1.95 EUR (2.50 USD) per month in Germany
- Per transaction invoice fee:
Klarna doesn’t actually charge users this fee, but it is not uncommon for merchants to pass the fee on to users. Typically 29 SEK (4.50 USD).
3. Interest charged to users on installment plans or late payments:
Effective interest rates are pretty similar to credit card rates:
- 25-30% in Sweden
- 15% to low 20+% in Germany
Why consumers use Klarna:
- Easier checkout experience
- Security - Not needing to provide merchants your credit card info
- Users get to receive and inspect goods before they settle up.
- Option to pay by installments
- Convenience - Consolidate all Klarna purchases for the month into a single invoice
Started writing at Quora Blog. Go say hi.
Am maintaining both blogs for now and will continue to add to my pros and cons list.
Anyone else writing on quora blog?
Short answer: 2D vs 3D-like
Great article on this: http://speckyboy.com/2012/12/11/the-flat-design-aesthetic/
e.g. Windows 8, Android
Skeuomorphic: mimicking 3D
I’ve wondered for a while now why Google doesn’t integrate gtalk / gchat with the Android messaging app.
Between iMessage and Whatsapp, they cover pretty much 95% of my real-time mobile communication. And the only reason I still use Whatsapp over iMessage (despite its slowly degrading user experience) is its cross-platform Android + iOS coverage.
That plus its network effect is what helps Whatsapp maintain its position as the #1 messaging app in all but 3 countries even today, 4 years in (eons in tech years really).
But, what if google integrated gtalk / gchat with its Android messaging app, and released a reliable iOS app?
Combine its cross-platform coverage on iOS, Android and web, with google’s ginormous base of existing users, this messaging platform could easily become the whatsapp killer.
image source: http://tech2.in.com
UPDATE: 5 Apr 2012
Rumours of google offering to acquire Whatsapp for a cool $1B. Sell now guys, sell now.
Great post by aihui:
Love With Food graduated from 500 Startups accelerator program about a year ago and we raised $650,000 in June of 2012. It was 3 painful months of fundraising. If you think fundraising is a piece of cake just because we were a 500 alum, think again! When I first began fundraising, all I hear was discouragement. Most will tell me the food space is hard, being a solo founder makes it even harder. Fundraising is one of the most painful things I’ve done in my life. It’s physically exhausting and worst of all, it was mentally torturing. My mind started to play games with me, and every waking moment, I had to fight the thoughts of being a failure and was at the brink of giving up countless times. Not only I had to endure the heartaches of rejections, I had to defend myself against cynicism that I didn’t have an Ivy league education hence I wasn’t qualified to run a startup. There are many reasons not to fund Love With Food, but me not having a MIT/Stanford education is definitely not a legit and fair one. I remembered walking out of that meeting and said “Watch me BITCH, I’ll prove you wrong.” Prove her wrong, I did.
Fighting thoughts of failure is one thing. Having person after person tell you that you suck / are not good enough, is horrid. You might even start to believe them!
But guess what. Such is life. And it doesn’t matter. Because you don’t need 75. You just need 1.
PS: Now go get your Love With Food box here.
21 notes (via aihui)
You’re shopping with your girlfriends at Orchard Road and it’s time to break for lunch, and rest your poor pretty feet. Of the gazillion restaurants in the vicinity, where do you go eat?
Fire up the app.
It tells you that your UOB Ladies card gives you a 20% discount at Marmalade Pantry in the next building. And your Citibank platinum visa card is offering a 1-for-1 main course at PS Cafe just a block away. Complete with Yelp / hungrygowhere reviews.
You have a great lunch, and save some money for more shopping later. Yay. :)
Anyone wants to start / build this?
I recently started using a neat little app called Done Not Done that let’s me keep a list of books and movies I want to read/watch.
So I’ve been rather “productive” in checking off a whole bunch of books/movies that I’ve wanted to get to for a while, and that made me really happy.
Until I got my email digest..
aileens, welcome to your digest! You have 18 in your Not Done (yet!) list, and you’ve done 3 things so far. Here’s some of the good stuff happening on Done Not Done recently…
This email made me feel like I really hadn’t accomplished much. :(
18 things not done, and only 3 things done.
I’m sure this was definitely not the feeling they intended to convey, but it was the first emotion I felt.
And unfortunately, we human beings are such pessimistic creatures that we perceive negative emotions 3x more strongly than positive emotions!
The point is this: Great user experience, is all about creating positive emotions when people are using your product.
Think about how your users would feel. Put yourself in their shoes. Think about how you would feel.
How can we improve the experience of the email digest?
The goal of this email digest is to get users to add more items to their list. Is the number of items that are not yet done, actually relevant to the user?
In this case, a simple re-wording of the sentence might have sufficed:
3 items done this week. You’re on a roll!
Here are some of the good stuff happening on Done Not Done recently. Check them out and add them to your list..
In summary, think about
Go forth, and create delightful experiences. :)
Update: I tweeted this post to @DoneNotDone, and guess what, not only did they respond, they actually took my suggestion to heart! Now that’s a delightful experience. :)
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