What is Klarna and should I use it?
Breaking into the consciousness of online shoppers via popular retail brand Asos, Klarna is quickly becoming a preferred way to buy now and pay later. Once accepted for the service, customers are given either a 14 or 30 day window to pay for their order. And the best part is – you only pay for what you keep. In short, Klarna is a way for those who can’t wait until payday to get the items they need – not too dissimilar to payday loans.
Is Klarna good to be true?
Anyone can apply for Klarna, but due to lack of disposable income and an increased trend of shopping online, Millenials are deemed to be the perfect target. With no interest, fees or late charges, surely it’s a win win situation for all those involved. It’s only when you consider that up to a quarter of Millenials in England struggle with debt that a problem arises. Giving them the option of purchasing in vast quantities with the illusion of no repercussions may lead to unpaid bills. This won’t only affect their credit score, but their details can be passed onto collection agencies too.
What’s in it for Klarna?
If Klarna aren’t charging fees or earning interest, then you may be wondering how they make any profit at all. It turns out that they rely on merchant transaction fees from the retailers themselves. In return, Klarna promises around 30% of extra ecommerce orders and an enviable boost of the average order value by 34%.
Yes, Klarna is becoming a popular method of buying now and paying later. You only need to look at the 15,000 plus merchants who have already jumped on board to see the effect it’s having on the online market. Used in moderation, and with a full intent of paying back the amount in the designated time frame, it’s a great tool for both retailers and customers alike.
Who wouldn’t like a nice new outfit for the Christmas party? However, it could also be a trap for those who divulge in impulse buying, who don’t want to be retrained by the shackles of a too far away payday and could find themselves with more than their latest fashion delivery at their doorstep.