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Klarna has revealed that losses more than tripled in the first half of the year – firm has been hit by a slowdown in consumer spending
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- Title
- Klarna losses more than triple as consumer spending slows
- Authors
- Kalyeena Makortoff
- Published
- Aug 31 2022
- Word count
- 507 words
That sounds like mostly a hit from rapid investments, so a rather internal problem. I don't personally care about Klarna but what would be interesting is the "slowdown consumer spending". There doesn't seem to be an actual value given in the article. Consumer spending slowing could, long term, be a good thing since it would mean inflation coming down.
I wonder are we all paying for klarna and the like? Since they charge the merchant, doesn’t that mean retail price is increased to cover the cost?
On a broad scale, pretty much. On a micro scale, on the perspective of a single merchant, it would depend on their strategy. Some merchants may just eat the cost since they perceive it as increasing attachment rates - price discrimination, getting as much from the demand curve as you possibly can, is the heart of business, after all.
That being said, as BNPL gets more popular I'd absolutely expect prices to increase to cover on a broad scale.
Sounds like they have just been throwing around credit a bit too recklessly, no?
These services seem to be slowly replacing store credit cards, which usually used to come with a “spend X amount of dollars and get X months interest free” financing option that was an even better deal than these buy now, pay later services, which usually charge a hefty interest rate.
Currently BNPL doesn’t really have high interest rates. Many of them don’t have interest on late payments at all, and fines are minimal typically. There is a reason that as a whole, BNPL companies make a lot of negative money.
Really? All the most of the I’ve seen have had interest The Framework Laptop, for example, is 8% interest with Klarna and Target charges 20% with Affirm.