Klarna and Zilch shrug off buy now, pay later crackdown with card launch
Klarna and Zilch have shrugged off a government crackdown on by buy now pay later payments after launching landmark partnerships with payments giant Visa to introduce physical cards.
Commerce network Klarna has begun piloting “Klarna Card” which aims to offer consumers greater spending flexibility without the pitfalls of traditional credit cards.
The card will use Visa’s tech to allow users to pay either immediately or over time through interest-free instalments.
Meanwhile, Zilch has traded out its former card network Mastercard for Visa, in a partnership that will launch its own first physical card.
Zilch said customers will be able to use the card anywhere Visa is accepted after its launch in September. Klarna said it is beginning roll out in the US, with 5 million consumers on the waitlist, before turning to Europe.
The BNPL firms are eying a new market share with the tangible product as they continue to take on traditional credit cards with their interest-free alternatives.
Government cracking down on BNPL
The news comes after the UK government pledged to clamp down on what it dubbed the “wild west” of buy now pay later services – something the industry has mutually lobbied for.
The Treasury is set to bring BNPL providers under the Financial Conduct Authority’s supervision, meaning they will have to adhere to the watchdog’s stricter framework.
Providers will be required to conduct affordability checks of consumers, including assessing their income, spending and existing financial commitments to ensure they can harness new debts.
Some providers already operated under FCA regulation, such as Zilch which sets personalised affordability limits for customers, starting at £50.
Swedish-headquartered Klarna faced widening losses in the first quarter of 2025 reaching $99m, up from $47m.
The firm’s consumer base topped 100 million, but the growth came amid a 17 per cent surge in consumer credit losses to $136m as failed repayment plans mounted.
David Sandstrom, chief marketing officer at Klarna, said: “[Consumers] want simplicity, flexibility, and transparency – all in one place.”
He added the new physical card would be “the future of everyday banking – creating smart payments to empower smarter shoppers.”
Philip Belamant, chief executive of Zilch, said: “With nearly 80% of UK adults still not regularly using mobile wallets, the physical card is a strategic unlock to greater transaction volume
“This move is Zilch executing its model at scale – removing cost from payments, increasing behavioural intelligence, and converting that into enduring value for both users and the ecosystem.”