Danish challenger bank Lunar takes on Klarna with pay later product

Cloud-based Nordic challenger bank Lunar has introduced a ‘pay later’ function for its customers, taking on buy-now-pay-later-giant Klarna.

As of today, customers will be able to split all transactions into four instalments retroactively or postpone a payment for up to 30 days in the Lunar app, which is not dissimilar from Curve's 'Go Back in Time' function.

The new feature will only be available to customers who deposit more than €270 into their account each month and includes all payments, both online and in-store and marks the first digital bank to release its own 'pay later' product, with other digital banks favouring more traditional credit options.

Ken Villum Klausen, founder and CEO of Lunar said: “The product is built for the customer, not the merchants. You don’t need different providers and we do not prompt the customers to spend more when they buy.”

“We let everyone manage their finances conveniently regardless of what kind of buy, bill or transaction they want to split or defer.”

Lunar’s new credit offering comes just six weeks after the challenger bank closed a €40m (~£36m) Series C funding round and promised to use the fresh cash to launch its own consumer credit products.

If a user wants to postpone a purchase or bill of €270 for up to 60 days, they will be charged €5 for the privilege, with users being able to split transactions collectively worth up to €1,400 a month.

Villum Klausen added: “We have a very clear picture of our customers’ transaction history and that is why we have built a post-purchase credit option that is not limited to shopping but can be used in all aspects of your financial life.”

Launched in 2015, Lunar has since amassed more than 200,000 personal customers and 5,000 business users across Denmark, Sweden and Norway. 

To date, the digital challenger bank has raised €104m (~£95m) and remains the only cloud-based digital banking platform to have secured a banking licence in the Nordics.