How many people use Klarna?

There’s no doubt that Klarna is one of the most popular BNPL services around, but just how many people are using it? Klarna has grown in popularity for a number of reasons over the years and these include the way it allows people to spread the cost of purchases and only runs soft credit checks for certain kinds of credit. It has often been praised for its flexibility and convenience. Let’s look at some important stats about Klarna including how many people are using the service right now.

The history of Klarna

Klarna was first founded in Stockholm, Sweden in 2005 and claims to have 150 million active users around the world. 34 million of these are in the USA according to figures on the company’s website. It’s said that more than 500,000 merchants have partnered with Klarna so they can complete transactions using their services. There are 2 million Klarna transactions every day across 45 countries. The company employs some 5,000 people and was co-founded by its CEO Sebastian Siemiatkowski. It claims to have “revolutionized Swedish e-commerce”.

Klarna Inc’s headquarters are in Columbus, Ohio. It has offices in New York City and staff from a huge range of companies on its books including Google, Apple, Facebook, PayPal and American Express. The company first started to really grow in popularity in 2016 when it launched its Buy Now Pay Later feature. The company handles more than two million transactions a day.

Why has Klarna become so successful?

One of the reasons that Klarna has become so successful is that it lets people pay for products and services in instalments, interest-free. It says it is preferred over other lenders by many due to its interest-free options and transparency. In 2021, it was valued at $45.6 billion, though a 2022 valuation put this at $6.7 billion, a drop of 85%. However, it made $1.85 billion in revenue in 2022, which was a 30% increase year-on-year. Almost 150 million consumers used Klarna in 2021. This was a 70% increase on 2020.

How to use Klarna

When you use Klarna, you have three ways to cover the cost of your payment. You can either pay it off within 30 days, pay in three instalments and make the first payment immediately or opt for Klarna Financing. This option is for bigger long-term borrowing and consumers can pay things off over a period up to 36 months.

How does Klarna make its money?

Most of the company’s income comes through merchant commissions and interchange fees. It’s income also comes from late fees and people paying interest on things they have bought through Financing.

Are there any risks involved with using Klarna?

Although Klarna comes with various benefits, there are drawbacks that you also need to be aware of. Many consumers have found themselves in trouble after failing to make repayments on time and seen their credit scores fall as a result. One survey found that more than two-thirds of customers said they’d spend more than they would if they had to pay for their purchases upfront.

Can Klarna harm my credit rating?

Klarna will only run a soft credit check on you if you’re using one of the shorter-term finance options. However, they will run a hard check if you apply for the longer-term Financing service. A hard check can cause your credit score to drop by a few points, and too many hard checks in a short period of time can cause lenders to think you’re not financially stable. If you default on a loan, this will be reported to the credit referencing bureaus. This can make it harder to borrow from anyone in future. You may be banned from using Klarna in future if you don’t make your repayments on time, too.

Why are so many people using Klarna?

Klarna can work for you if you’re able to make your repayments on time and could even help you build up your credit rating. Just make sure that you’re able to comfortably make your repayments on time as things could become very difficult for you if you can’t. If you can’t make your repayments and Klarna can’t get in touch with you to resolve the situation, they might report your debt to a debt collector. Some people say Klarna has become particularly popular with young people who are less likely to be able to make the repayments when they are due.

How long has Klarna been reporting to credit referencing agencies?

One of the reasons Klarna became so popular a few years ago is that it didn’t used to report customers’ purchases to credit referencing bureaus. This changed in 2022 when it started reporting to TransUnion and Experian.  The information they report includes any late payments or unpaid purchases you might have. They will also tell these bureaus whether you’ve paid on time or not. Your credit score will certainly be affected if you use Klarna Financing due to the hard check that takes place when you apply for it. Before you can start using Klarna Financing, you will need to get approval and sign a regulated credit agreement. If a payment is missed, Klarna will inform the credit referencing agencies.

Is Klarna likely to remain popular?

Currently, it seems there is very little chance of Klarna falling out of favour, although the cost of living crisis has hit many people’s credit scores hard, which means it could be more difficult for people to use services like Klarna Financing in future. The company also has a number of competitors, and these include Affirm, Sezzle, PayPal Credit and Afterpay.

Services like Klarna have also faced some controversy, with some claiming that they have irresponsibly lent to many people who weren’t realistically able to stick to the payment terms. There are also concerns that some consumers fail to read and understand the terms and conditions that they are signing up for and therefore miss payments as a result. BNPL services have proved to be particularly popular with Gen-Z and millennials, and it doesn’t look like this will change any time soon.