Klarna, a Swedish company, offers a ‘buy now, pay later’ service that is gaining popularity among millennials. The service allows customers to delay payment or split it into instalments, with no interest or fees. Klarna has partnered with over 4,500 UK retailers, including ASOS, Topshop and JD Sports.
Despite its appeal, Klarna has faced criticism. Some users have been surprised by the firm’s use of debt collectors for late payments, while others have found it too easy to overspend. Critics argue that the service encourages irresponsible spending and could lead to debt problems.
In response, Klarna insists it carries out credit checks and has a responsible lending policy. It also says that most customers pay on time, and those who don’t are not charged late fees. The company has been questioned by the Financial Conduct Authority, but so far has not faced any regulatory action.
Consumer groups advise shoppers to use Klarna carefully, warning that it can affect credit scores. They suggest using it only for necessary purchases and ensuring payments are made on time to avoid potential issues.
Go to source article: https://www.theguardian.com/money/2018/nov/17/klarna-buy-now-pay-later-system-that-is-seducing-millennials