Klarna is primarily a buy now, pay later company where consumers can purchase everything from groceries, food-delivery to concert and airplane tickets. Now what could possibly go wrong with this service?
Klarna may offer an interest-free way to pay in installments on a single purchase without the stress of a credit check but that doesn’t mean not paying your Klarna bill is okay.
Apparently, this is a big misconception with some consumers, especially younger ones, that Klarna bills can be skipped.
Klarna Experienced 136 Million in Credit Losses
Klarna experienced a loss of $136 million in credit losses in the first quarter of 2025 primarily due to a 17% increase in customer defaults compared to the previous yea
Despite posting losses, Klarna is not going anywhere. In fact, Klarna is preparing for a stock market debut through an IPO. The CEO plans to keep the company moving forward, linking the $136 million in credit losses to the company’s rapid expansion, rather than a deterioration in customer quality.
Klarna’s spokesperson clarified that the increase in credit losses is primarily because the company has issued more loans, not because of worsening consumer behavior or economic conditions.
Who is using Buy Now, Pay Later services?
Buy Now, Pay Later (BNPL) services are especially popular with young people, and more than half of them have used such services. Surveys show that Gen Z and Millennials are the leading users of BNPL, with 59% of Gen Z and 58% of Millennials having used buy now, pay later services.
Some sources cite that 64% of Gen Z (ages 18–28) have used buy now, pay later at least once. What could go wrong?
Klarna Customers Not Paying Bills
For the buy now, pay later customers that aren’t paying back their loans, a lot can go wrong.
Unpaid debts can be sent to collection agencies and will likely result in negative credit reporting to the major credit bureaus. Negative items on your credit report will impact your ability to obtain future credit. That might mean you’re unable to rent an apartment, buy a house, finance a car, and even get new employment if an employer performs credit checks.
Klarna Can Access Your Bank Account
And don’t forget, when you sign up for Klarna, you’re not just getting flexible payments, you’re also giving Klarna permission to reach directly into your linked bank account or card to collect what you owe. If you miss a payment, Klarna doesn’t wait for you to catch up; they’ll automatically attempt to withdraw the funds, sometimes multiple times, using the account information you provided at checkout. This isn’t a hidden trick, it’s spelled out in the fine print of their agreement.
No doubt Klarna is convenient and easy to use, making items that may be unaffordable, very tempting. The technology fits naturally into the digital lifestyles of Gen Z and Millennials, who are comfortable managing finances through apps and online platforms. But is Doordash, Instacart, a Cruise or Concert ticket worth going into debt for?
Klarna’s Push Towards Artificial Intelligence (AI)
While Klarna’s CEO is working hard to expand his company’s services to millions more consumers, he’s also simultaneously letting go of nearly half its workforce and replacing those jobs with artificial intelligence! So On one hand, Klarna is championing financial inclusion, making credit more accessible and flexible for people who want alternatives to traditional credit cards. But On the other, the very technology that enables this rapid scaling and efficiency is also responsible for eliminating thousands of jobs
The irony is clear: Klarna’s technological leap allows it to serve more people than ever, but the very innovation driving this growth may also be creating job instability for those same people. Thanks for watching, please like and subscribe and I’ll see you in the next video.
