[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.

[grues-dinner]

Surely that averages out with people switching the other way during the save-up period?

Perhaps for an individual shop right now, in a world where Klarna exists but not universally, yes, there's a benefit to using it to lock in that particular customer right now.

It's less obvious to me, in the long run, that widespread Klarnification results in benefits to any particular shop. As mentioned earlier, having Klarna sapping up to double-digit percentages of the portion of customers' money (it's "zero interest" until it very much isn't, and they're in the "subprime" market) they were spending on possible-Klarnables and a few percent of yours on top as fees is easily a bigger impact that the average losses, if any, from the delta between switch-away and -to.

It's a bit of a prisoners' dilemma: you stand to gain money by defecting (to using Klarna) unilaterally, but if everyone does that, you all, plus the customer, collectively lose money (to Klarna).

[ericmay]

> Surely that averages out with people switching the other way during the save-up period?

Maybe? I’m not aware yet of any data that would support that hypothesis one way or the other. But we know that some businesses fail and some succeed so it would lead me to believe that hypothesis probably isn’t correct. As you mention though the availability of these offers isn’t universal, some businesses eschew these options and others don’t, and we will see that play out in the market.

If the businesses that don’t offer these services (cash only businesses as an analog) fail or convert you might have your answer.

I will also say that for many businesses they offer more than one BNPL provider at checkout so there is competitive pressure to offer good terms, have good creditworthiness models, and features to attract customers. Platforms like Shopify allow BNPL providers to create easy to use plugins that appear at checkout and merchants can add a few including Shopify’s home grown solution rather trivially.

In general I think your argument that it’s less obvious that it’s beneficial “in the long run” rests on the same logic that credit cards, 0% for 12 month offers, personal loans, etc. do as to whether there are benefits. Right now businesses add these products and see revenue go up, even if margins go down by 6-8% or so.