Shoppers will see the Commonwealth Bank-backed buy now, pay later app Klarna appear at checkouts as a payment option before the end of the year, as the partnership plays catchup with Afterpay in Australia.

Klarna can currently be used for online purchases.

Its Australia and New Zealand boss Fran Ereira says her team is optimising the app for scanning from phones, and it would “absolutely” be in stores before 2021.

More than 50 retail groups in Australia accept Klarna payments online, and will look to offer it in store. More will follow as the service gains traction.

The Commonwealth Bank and Klarna, which have 50:50 ownership of the latter’s Australian and New Zealand business, eased off promoting the app as the coronavirus pandemic took hold early this year.

However the marketing effort is about to resume, with the bank keen to attract and retain younger customers who are increasingly adopting digital services like Afterpay instead of credit cards.

Ereira claims Klarna showed more relevant items and offers to users, and helped collect refunds and return unwanted purchases.

Klarna will be offered to the CBA’s seven million customers who use digital banking.

“You will certainly start seeing a lot more co-marketing through channels other than just the (CommBank app),” Ereira told AAP.

She said Commonwealth Bank customers had been a major contributor to downloads. The app can be used by customers of other banks too.

There have been more than 250,000 downloads of the program in Australia, according to Klarna, since it became available in this country in January.

Like other providers such as Humm, Splitit and Zip, the bank and Klarna have a huge task to rival the market leader in Australia.

Afterpay claims more than 3 million customers across Australia and New Zealand.

In Australia, the Afterpay app has had more than 90,000 downloads in each of the six months to June, according to data compiled by Sensor Tower.

The next most popular app was Zip, which was downloaded about 80,000 times per month.

Klarna averaged about 50,000 downloads, albeit from a late start.

However Morgans’ analyst Richard Coles says the value and frequency of purchases by users are also important to success.

He said app providers’ growth was not just coming from new users, but existing users making more and more purchases.

“The technology really clicks with some people and they keep using it,” he said.

Lay-by sales used to account for about 10 per cent of retail sales, Coles estimated, and sales using buy now, pay later apps have exceeded this.

Coles is unsure how much growth is left in this market based on those estimates.

“It’s hard to know where it can go from here,” he said.

Yet he noted app providers were targeting products and services outside the traditional lay-by ones, such as dentists, which could mean there was plenty of growth left.

Klarna also recently announced it has inked a deal with Asos that allows Australians to shop with the global fashion retailer and pay in four installments.

According to Klarna, shoppers now have the option to spread the cost of their purchases over six weeks using Klarna’s pay in four feature, without interest or fees when repayments are made on time.

“We want to give our Australian customers the best possible experience, whether that’s in the broad range of Asos Design and branded products on site or the variety of delivery and flexible payment options we have available,” said Eve Williams, Asos Brand Experience director.