[iforgetti]

Glen Okun of NYU business school has written about BNPL loan portfolio weakness.

The AI marketing is just an attempt to reframe the value narrative of the company before IPO. They would rather be seen as an AI company than an unsecured lender of last resort.

The narrative on Klarna’s core business is not good in any case, either an extractive lender benefiting from people buying what they may not afford and charging exorbitant interest or a lender of last resort who has not properly underwritten the risk in their portfolio. Neither is preferential to them compared to a value narrative framing them as an AI company. Likely the market is too skeptical in this environment to take the bait however.

[subtlesoftware]

If you default on your Klarna loan, you could pay them back in support hours:

> The pilot has started small, with two of the new breed of customer-service agents live now, but the ambition is to tap into candidates such as students or rural populations. “We also know there are tons of Klarna users that are very passionate about our company and would enjoy working for us,” he added.

[from the bloomberg article: https://www.bloomberg.com/news/articles/2025-05-08/klarna-tu...]

[kaliszad]

Here is an archive of the article:

https://web.archive.org/web/20250512120733/https://www.bloom...

[spaceman_2020]

I can't believe it takes b-school professors to figure out that people financing their DoorDash might not be the best people to lend money to.

[rchaud]

This is the primary positioning tactic used across the startup industry . Uber isn't a taxi app, it's actually the "future front end for millions to access autonomous transport". Doordash isn't a delivery app, it's an "on-demand logistics" platform.

Similarly, Klarna isn't a shady payday loan company, it's an "AI-first consumer finance play".

[Avicebron]

> "AI-first consumer finance play"

In a more civilized time, saying this was your plan would get you chucked feet-first into a wood chipper.

[dcsan]

The addition of "feet first" made this much more evocative!

[runlaszlorun]

oh I think we're heading back that way slowly...

[spaceman_2020]

Heard a new term yesterday: “private credit”. Lenders that give unsecured loans to businesses at high interest rates

We just used to call them loan sharks

[dagw]

Not that I necessarily disagree with your overall take, but can someone explain how 'financing' your DoorDash order with a credit card is perfectly OK, but financing with Klarna is somehow dubious and shady. Surely the problem is buying stuff you cannot afford, not how you choose to buy it.

[twosdai]

This is a great comment and comparison.

I think there is a feeling that klarna, and other bnpl companies just lend without checking or caring of consumer credit, or buying power. I've never used them before, so I don't know if this is a case.

With credit cards there is the "appearance" of them checking credit scores, ability to pay , etc.. before giving a credit card.

I say appearance, because as we all know cc companies will just lend cards to anyone, and then charge huge interest rates.

Ultimately it's another form of credit, and it's a minor change on the current system. But since it's finance and lending, it's a step to make lending easier.

[IlPeach]

Lending and banking in general is a highly regulated market so they do have to underwrite and do anything in their power to avoid lending money or start contractual obligations with people that are bad creditors. Source: worked for them for 2 years.

[blibble]

> a lender of last resort who has not properly underwritten the risk in their portfolio.

I thought they more or less instantly offloaded the risk as asset backed securities to clueless people who didn't know the actual risk profile what they were buying

sound familiar?

[Freak_NL]

They are scum, and currently are suffering from increased scrutiny from governments for pushing their buy-now-pay-later exploitative business everywhere. In the Netherlands they are even attempting to gain access to brick-and-mortar stores by partnering with Adyen¹ which provides the payment solutions, but the government is being vocal about that being unwanted. This is in addition to the unabating coverage in the media about how Klarna is about as harmless as vaping — that is, they are enticing young people into buying stuff they don't need² before they can afford it.

Shopkeepers don't want it, but fear they must if big chains start offering it, just as online shops feel like offering it is unavoidable due to the popularity in certain demographics. The financial watchdog doesn't like Klarna, and is increasing scrutiny³.

If Klarna has trouble marketing their value, then that at least is good news, but not unsurprising given the spate of attention it received over the last two years.

1: So much for the ethical side of Adyen (e.g., https://www.adyen.com/impact sounds hollow when you partner with loan sharks).

2: Some people are quick to defend Klarna for offering people a chance to buy their necessities with what amounts to a payday loan, but that is bullshit. Klarna predominantly is not used for daily necessities.

3: Klarna now has to state that they are offering a loan in the Netherlands where they are available as payment option, with the mandatory "borrowing money costs money" tag-line.

[nikanj]

Shopkeepers do want it, because it expands their market from those with funds to also those without. Klarna carries the lending risks, for the shopkeeps it’s a risk-free customer base

[Freak_NL]

In the Netherlands no less than twenty trade associations sent letters to the government on behalf of their shopkeeper members urging legal action to prevent Klarna from coming. Part of it is that Klarna is fairly expensive compared to the common payment methods (i.e., cash and debit cards). Klarna charges a whopping 4% of the purchase price, whereas using a debit card (perhaps 95% of payments in physical shops) costs a fixed 17 euro cents, and cash costs just the costs of keeping it around safely and getting it to the bank.

But there is also the realisation that a customer who uses BNPL today, won't be coming back next month when they are paying off their loan.

Dutch shopkeepers do not want Klarna, but if major chains like Primark etc. do it, they fear customers will start expecting it.

[ericmay]

> But there is also the realisation that a customer who uses BNPL today, won't be coming back next month when they are paying off their loan.

I don’t think that’s a good argument. For shops and customers that utilize BNPL you are not typically making routine purchases at the shop anyway because the minimums are $50 or more (merchants can negotiate those terms with the provider) but the base tends to be around $50.

If you buy a bicycle using BNPL you’re not like coming back to the shop the next month and buying a new bike again.

BNPL increases sales and merchants really like using it which is why they are signing up for it more and more. Basically the increase in cost is worth it to increase sales.

There may be some bad social dynamics, taking out loans, etc. but generally both merchants and customers like using those products which is why they use them.

[losteric]

How does bnpl increase sales?

My intuition is it brings in a slight bump now, at the cost of longer term.

The customer can either wait N months to buy the bike cash, or buy it now and pay interest for the next K months.

- In the first scenario, customers can quickly save up and return for accessories/etc.

- in the latter, the customer is playing XX% on top of the bike purchase which ultimately reduces the purchases that customer can make.

It’s just exploiting the “present bias”/time-discounting in human psychology.

[ericmay]

Your intuition is wrong. As a simple example, during the months of saving in cash, by the time they have the cash, if they even save at all, they have more options for purchase. So maybe they go with the original merchant, maybe they don’t. Maybe they buy something else.

Instead merchants prefer to lock in a sale right then and there, and they pay for that service.

[d1sxeyes]

Your assumption that customers will not buy accessories until they have repaid the Klarna loan is a long way from certain.

Loans like this also encourage customers to increase spend, because adding an extra few dollars (cents, etc) to your monthly payment is psychologically not as big of a deal as waiting another month or two before you can afford the more expensive item.

[gruez]

>How does bnpl increase sales?

Same way credit card increase sales, such that stores are willing to eat the higher interchange rate it costs compared debit.

[trollbridge]

Merchants really do not want a 4% decrease in their gross revenue.

[ericmay]

Yes they do, because they don’t have a decrease in gross revenue, but instead a higher gross revenue and smaller margins. But that results in higher profit for the merchant so they go with it.

[firesteelrain]

How is Klarna any different than Affirm or its precursors like Bill Me Later which later became PayPal Credit?

[Freak_NL]

Never heard of them. I don't think I ever saw these offered in online shops operating in the Netherlands, while Klarna is in almost every online shop. If they offer BNPL they are probably just as much scum.

[gmd63]

They might say they want it, but like a wise parent guiding the BNPL spending habits of a teenager, government is right to step in and stop shopkeepers from seeking to cheese their way through business (only in the short term) by relying on a fickle and unsustainable base of new creditors.

Putting a new group of people into predatory debt is a nice way to juice your numbers before you dump your shares, but it's not a good way to sustain an economy focused on producing real value.

[ToucanLoucan]

You know some businesses are led by people not board rooms, and especially businesses that consider themselves part of a community, and sell to their neighbors, don't want said neighbors to be rat-fucked by exploitative financial products, even if it will possibly benefit them at no risk.

This is generally called "being a person with a soul."

[gruez]

>businesses that consider themselves part of a community, and sell to their neighbors, don't want said neighbors to be rat-fucked by exploitative financial products, even if it will possibly benefit them at no risk.

>This is generally called "being a person with a soul."

Wholesome. So the hole in the wall restaurant that only takes cash was actually trying to save its customers from a lifetime of credit card debt, rather than saving the 3% interchange fee and possibly tax evade?

[ToucanLoucan]

I mean the hole in the wall burger joint near me that I love openly charges 3% more when you pay with a credit card for the exact reason of not wanting to give away 3% of their sales figure to a credit card processor, since said credit card processor didn't cook the burger. And you can feel how you feel about that, I personally appreciate the transparency and make it a point to bring my debit card.

I don't know if they're engaged in tax fraud though. Not really my department.

I believe in business done for mutual gain, that's how I do mine, and I make it a point to find as many like-minded people to do business with because they're just easier to deal with. I don't feel the need to get second quotes on car repairs because I've gone to the same shop my dad went to. I know the guy, I handle his IT needs. He isn't out to get me for every dime he can, and I'm not out for every dime either: we go to each other when we have problems, and we solve those problems for one another with some on the top to take home.

I'm sure neither of us will be billionaires but I can also sleep at night which is nice.

[charcircuit]

The board of a company are people.

[Yeul]

Sure but it is easier to order genocide from an office than being the guy who has to march the children into the gas chamber. Humans have come up with wonderful bureaucracy to dilute responsibility.

[charcircuit]

Your comment doesn't show how people, as opposed to an board, would be any better in this scenario. Both would weigh the pros and cons of such an action before making such a command.

[skeeter2020]

that depends on the deal. Restaurants don't wnat meal delivery services because of the terrible economics but really have no choice if the delivery company captures the customer base.

[trollbridge]

The restaurants where I am banded together against app based food delivery. The only ones that do are Pizza Hut, McDonald’s, and Subway, and those typically have a 25-minute wait since no local Doordash/Uber drivers live close enough. Ergo, nobody uses it.

The local independent Chinese place delivers and the local pizza places also deliver. (Pizza Hut’s own delivery is significantly cheaper than ordering it via Uber Eats.) Ergo, restaurants don’t have to deal with the rent seeking that siphons off profits, and money stays more local.

In a city an hour away, a local guy came up with his own food delivery service and eventually paid a programmer to make a simple app. You can now order from a whole bunch of places cheap. It’s amazing he’s stayed in business, but one thing he doesn’t do is rip off restaurants.

[returnInfinity]

that's the short term, if everyone starts to default, something is going to break and come back to the shop keeper.

[dreamcompiler]

WeWork tried this and it worked out great for their CEO. They were a real estate landlord masquerading as a tech company. Stupid SoftBank bought that lie and made Neumann filthy rich.

But as you say that was ZIRP when everybody was stupid and this is now.