Buy now, pay later firm Klarna has enticed 60,000 new retailers to sign-up this year with promises of bumping up shopper spend
- The fintech lets users purchase items and pay for them at a later date
- It has boomed in popularity as younger users flock to the pay later model
- It signed up 60,000 retailers globally in 2019 and counts 6m UK users
Buy now, pay later juggernaut Klarna has signed more than 60,000 retailers so far in 2019, including Microsoft and travel website Expedia, as it prepares for a bumper Black Friday and Christmas period.
While it didn’t disclose the number it had signed up in Britain, it has seen River Island, Boohoo, Abercrombie & Fitch and Pretty Little Thing among others join, all lured by the premise that consumers spend more using the Swedish fintech firm.
Klarna, valued at around $5.5billion, making it one of Europe’s biggest unicorns, has exploded in popularity among retailers and shoppers since it arrived on the scene in 2015.
Swedish fintech Klarna has been at the forefront of the buy now, pay later boom among younger shoppers
It said in a statement that 6million people in Britain have used its buy now, pay later model and has added ‘55,000 new customers each week’.
When it previously announced its financial results in May, it said it signed up 25,000 new UK users a week in the last three months of last year, helping bump its worldwide revenue up to £445million.
The new figure suggest that it has more than doubled the number of Britons it has managed to get to use the service. It says the average UK shopper used it 8.6 times last year.
The firm, backed by American rapper Snoop Dogg among others, is preparing for what could potentially be an huge last two months of the year, as its younger target audience will likely take advantage of Black Friday and Christmas discounting and kick the cost of it down the road.
Consumers who use Klarna are offered multiple ways of paying for items, including paying for an item 30 days after purchasing it, slicing the cost into three monthly payments, or setting up plans with retailers of between six and 36 months.
It has also moved into providing payment options in-store, with 10,000 stores including H&M, Halfords and Schuh letting you use Klarna offline.
Snoop Dogg is one of Klarna’s best known investors, and appears in some of its adverts
Klarna’s pitch to retailers meanwhile is that shoppers who use it spend more, and more often, something shops are banking on in the run up to the busiest shopping period of the year.
It said merchants which used it reported a 55 per cent increase in the average order value of customers, and 70 per cent of consumers make multiple repeat transactions over a 12 month period.
Though in most cases it doesn’t come with any interest charges and describes itself as a healthier, simpler and smarter alternative to credit cards, buy now, pay later products can harm your credit score if you don’t pay and leave you with big bills to pay if you use it to excess, something easily possible around Christmas time.
Citizens Advice said over 25,000 people came to it with problems due to buy now, pay later costs in 2018, which includes debts relating to point of sale finance like Klarna.
Klarna was described by one financial commentator as ‘a very complicated and potentially quite dangerous way to manage your shopping habits’, when we looked at the company earlier in the year.
Klarna ran a series of adverts in Autumn with partner retailers including JD Sports and Missguided
Separate figures published today by UK Finance found that Britons spent £11billion on credit cards last month, 2.3 per cent lower than the same month last year.
However, the amount of outstanding borrowing increased by 3.1 per cent year on year, the trade body found.
Luke Griffiths, Klarna’s UK general manager, said of the new figures: ‘We know that customers love the flexibility and convenience that comes with our products and by delivering the best possible experience to them, we’ve been able to partner with some remarkable brands and retailers in the UK.
‘As we continue to expand our offering across different verticals and touchpoints, I’m incredibly proud of the momentum we’ve managed to achieve since the start of the year.’
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