PayPal vs Klarna: Are Their New Debit Cards Actually Worth It?

In the last few years, fintech companies have expanded far beyond their original niches. PayPal used to be the online checkout button. Klarna used to be “that Pay in 3 service.” Today, both are pushing something much bigger: everyday debit cards designed to compete directly with banks and neobanks. For UK consumers, this shift raises an obvious question: Are PayPal and Klarna’s new debit cards genuinely good – or just clever marketing? We break down how each card works, how the rewards compare, their fees, their real value for travel, and the type of user each card best serves.

Why PayPal and Klarna Suddenly Care About Debit Cards

Fintechs used to focus almost entirely on online transactions: Pay in 3, checkout buttons, merchant tools, etc. But traditional spending is changing. Consumers are steadily moving toward app-based debit cards with rewards, budgeting features, and low travel fees. Revolut, Monzo, and Chase have grown massive user bases this way. So PayPal and Klarna want in. Their goal is simple: capture day-to-day payment volume, not just online shopping; compete with neobanks on user experience and fees; and offer rewards, something regular debit cards in the UK rarely provide. And with that, two new products have emerged: the PayPal Debit Card (UK) and the Klarna Debit-First Card.

PayPal Debit Card (UK): Simple Rewards, Strong Travel Features

What It Is

The PayPal Debit Card is a free Mastercard debit card linked to your PayPal wallet and PayPal balance. You use it like a normal debit card in shops, online, and abroad. No new bank account, no switching - just a card layered on top of PayPal.

Rewards: 1% Back Through PayPal+

PayPal recently launched PayPal+, a free loyalty programme that rewards almost all PayPal users. But the PayPal Debit Card takes it to another level: 1 point per £1 spent, 1,000 points = £10, so effectively 1% cashback, redeemable directly at checkout. Without the card, PayPal+ gives you just 1 point per £10 (0.1% back), so the card provides a 10x higher earn rate. Points can stack on top of your existing bank and merchant rewards, making it unusually valuable for a free debit card.

Fees & FX

The PayPal Debit Card has no monthly fee, charges no PayPal currency conversion fee on card purchases, and applies no PayPal cross-border fee. Only the underlying Mastercard FX rate applies. PayPal also doesn’t charge ATM withdrawal fees, though ATM owners may add their own.

App Experience

Everything lives inside the normal PayPal app: real-time spending, points earned, PayPal balance, linked accounts, and optional extras like PayPal Credit and Pay in 3 (separate from the debit card). There’s no new system to learn.

Who the PayPal Debit Card Is Best For

The card is ideal for everyday spenders who want a simple 1% back without opening a new bank account, travellers who want no FX fees from the provider, and regular PayPal shoppers who want rewards inside an ecosystem they already use.

Klarna Debit-First Card: Flexibility, Perks, and BNPL Power

Klarna’s card takes a different approach. Instead of being just another debit card, it blends pay now and pay later into a single product.

What It Is

The Klarna Card is a Visa debit-first card connected to the Klarna app. By default, you pay immediately using your Klarna balance or linked bank account. Afterwards, you can apply to split the purchase into Klarna’s BNPL instalments (such as Pay in 3), if eligible. It functions like a normal debit card, but also like a gateway to Klarna’s instalment features.

Rewards & Memberships

While PayPal keeps rewards simple, Klarna focuses on perks and tiers. The card itself has no monthly fee, but Klarna offers paid memberships (Core, Plus, Premium, Max) that unlock: 0.5-1% cashback when paying with Klarna balance, up to £80/month in merchant discounts, and travel perks like eSIM data, lounge access, and insurance on higher tiers. In addition, Klarna’s UK app offers up to 10% cashback at selected retailers when you shop through the app. Tracking everything requires more effort, but perk hunters can extract real value.

Fees & FX

The Klarna Card has no annual fee, charges no FX fees, and uses the underlying Visa exchange rate. If you use BNPL and miss repayments, late fees apply. From a travel perspective, it competes directly with Monzo, Revolut Standard, and Chase UK for fee-free international spending.

BNPL Flexibility

BNPL is Klarna’s biggest differentiator. Buy something in-store or online, open the Klarna app, and you can turn it into a payment plan if eligible. Approval is case-by-case, based on credit and affordability checks. While convenient, missed payments trigger fees and impact your standing with Klarna. This card is best for people who use BNPL responsibly.

Who the Klarna Card Is Best For

The Klarna Card is ideal for heavy Klarna users, flexibility seekers who want both pay-now and pay-later options, travellers looking for no-FX spending, and perk-focused shoppers willing to optimise discounts and memberships.

PayPal vs Klarna: A Direct Comparison

For Simple Rewards → PayPal Debit Card

The PayPal Debit Card offers a straightforward 1% back with no monthly fee and no FX fees. It’s the better choice for people who want predictability and low maintenance.

For Flexible Payments → Klarna Card

If you want the option to pay now or split later, Klarna is the clear winner. Its BNPL integration and app-based experience are unmatched in this category.

For Travel → Tie (But PayPal Is Easier)

Both cards charge no FX fees from the provider. PayPal is simpler: no-FX spending plus flat 1% rewards. Klarna is stronger if you also use the memberships, travel insurance, or lounge access perks.

For Stacking Rewards → PayPal + Your Credit Card

Because PayPal+ points stack on top of your existing bank rewards, many UK users combine the PayPal Debit Card with a cashback credit card. Klarna then becomes the optional “flexibility card” when instalments are genuinely useful.

Fine Print: What to Watch Out For

No FX Fees Doesn’t Mean No Cost Abroad

ATM operators may add their own fees, and the Mastercard/Visa exchange rate still applies. Always avoid dynamic currency conversion (DCC) by selecting “charge in local currency.”

Memberships Aren’t Automatically Worth It

Klarna’s perks are valuable only if you use them. Occasional users will often get better value sticking to the free tier.

Legal Protections Differ

PayPal Debit offers standard debit protections and Mastercard chargebacks. Klarna BNPL is not equivalent to Section 75 credit card protection. Use credit cards for large purchases where protection matters.

So… Which Card Should You Use?

Choose PayPal Debit If You Want:

A simple, reliable 1% reward, a free card with no provider FX fees, and seamless integration with PayPal checkout.

Choose Klarna Card If You Want:

Flexible payment options, access to perks and memberships, or you’re already a heavy Klarna user who values the ecosystem.

Final Verdict

The PayPal Debit Card and the Klarna Card represent two different philosophies. PayPal wants to reward your everyday spending; Klarna wants to give you flexibility and perks. The right card depends on your behaviour. If you want simple, predictable value, choose PayPal. If you want flexibility and you manage BNPL responsibly, Klarna can be a powerful option. Used wisely, either card can become a strong everyday companion for UK spending in 2025.