One million new customers flock to Klarna amid cost of living crisis

One million new consumers have flocked to buy-now-pay-later (BNPL) provider Klarna amid the cost of living crisis.

The Swedish company said customer numbers in the UK jumped from 17m in the summer of 2022 to 18m at the end of June this year. And the average age of users also rose from 33 in 2021 to 36 today.

Bosses said growth was fuelled by partnerships with brands such as luxury store Liberty and Paultons Park, home of Peppa Pig world.

But campaigners sounded the alarm over the growth of BNPL and said the rising age of consumers emphasised how households have struggled with living costs. BNPL allows customers to pay for purchases in instalments and has exploded in popularity.

But there are fears consumers overspend and unknowingly build up debt that they will struggle to pay off. Klarna said its average order value is £80 and the average outstanding debt is £150, which it said was far less than typical debts accrued on credit cards.

The top categories for shoppers using Klarna, which offers payment services beyond BNPL too, were clothing, home and garden, and leisure and sport.

In a brief update, the firm said the total value of goods bought with Klarna between April and June was 26pc higher than in the same quarter last year.

In Europe, the total value increased 14pc, in part thanks to the collapse of other BNPL providers such as Clearpay and Zip.

Klarna chief executive Sebastian Siemiatkowski said: ‘While other, smaller players dial back their commitment or leave the region, we’re doubling down, further strengthening our position in Europe, as well as the US.’

Klarna  said customer numbers in the UK jumped from 17m in the summer of 2022 to 18m at the end of June this year

But Reena Sewraz, Which? money expert, said: ‘Which? research has found that despite being bombarded with BNPL options at the checkout, information about the potential risks attached to it – that users are taking on debt and what may happen should they miss payments – is not always made clear to consumers by all providers.’

Which? has urged the Government to press ahead with regulation of BNPL. Meanwhile, providers such as Klarna have supported safeguards to protect consumers.

It is eyeing a return to profit this year after its valuation tanked 85pc last year during a downturn in the fintech sector after a pandemic boom.

Siemiatkowski, 41, said in May that Klarna, which he co-founded in 2005, was ‘on track’ to turn its first annual profit since 2018. Last year, it made a record loss of £830m, though Siemiatkowski’s pay jumped 35pc to £1.05m.