Klarna Docs - BNPL promotion rules 101

BNPL promotion rules 101

The Design and Distribution Obligations (DDO) are laws overseen by the Australian Securities and Investments Commission (ASIC), which came into effect on 5th October 2021. These laws aim to help consumers obtain appropriate financial products.

Under these regulations, if you are promoting or recommending Klarna or Klarna’s products, you may be considered a “distributor” of Klarna Pay in 4 product in Australia must take reasonable steps to ensure Klarna is being promoted to its target market only, as set by the Klarna Pay in 4 Target Market Determination (“TMD”).

A TMD is exactly as it sounds. It describes the type of customers that the product has been designed for and targeted to; and ensures customers' are front and centre when considering which financial products are suitable for them.

Klarna’s Pay in 4 is targeted at consumers who want the flexibility to buy what they love today and spread the cost of their purchase over time.

Klarna’s Pay in 4 is available to consumers who: 

  • Are at least 18 years old;
  • Have an Australian residential address, as Klarna is intended for customers living in Australia;
  • Have provided a valid email address and phone number for us to communicate through;
  • Have been properly identified by Klarna in accordance with applicable anti-money laundering rules; 
  • Have a financial situation that meets Klarna’s credit assessment criteria based on internal Klarna information and third-party data. This excludes customers in recent hardship, bankruptcy, and customers who have too much outstanding debt with Klarna; and 
  • Meet the Klarna product usage criteria, such as not having too much outstanding debt, inappropriate usage of Pi4, or previously not repaying a Klarna purchase.

Customers who do not fulfill the above criteria are assessed as not suitable to use Klarna’s Pay in 4. If you are a distributor, you are obligated to review Klarna’s full Target Market Determination and promote Klarna’s Pay in 4 product consistent with the TMD.

When promoting or recommending Klarna to your customers, you may be required to take steps to ensure that you’re doing so consistently with our Target Market Determination.

  • Segment your database
    If you collect demographic data that you use when advertising to your customers, be sure to apply relevant segmentation in line with the TMD wherever possible when promoting Klarna’s Pay in 4.
  • Advertising via paid channels
    Ensure that you or your media agency is aware of and implements relevant audience targeting controls to avoid targeting consumers that are not consistent with our TMD.
  • OOH
    Consider the placement of your OOH advertising including Klarna to ensure that it is consistent with the TMD to reduce the risk of targeting an inappropriate class of customer.
  • Influencers
    If you use influencers to promote Klarna’s Pay in 4, be mindful of the TMD, and choose influencers who are consistent with Klarna’s TMD and whose followers are also aligned with the TMD. 
  • In-store
    If you are a merchant whose customer base is inconsistent with Klarna’s TMD, please consider whether advertising Klarna in your stores is appropriate.