Snoop Dogg backed fintech firm Klarna now has 4.4m users in Britain as young shoppers flock to the ‘buy now, pay later’ model
- Klarna now has 4.4m active UK users who typically use it eight times a year
- Around 3,500 UK shops have partnered with it, allowing users to pay for items up to a month after they’ve bought them, or slice items into multiple payments
- However it markets itself to retailers on being able to get customers to spend more each time they shop, often using money they don’t have
Klarna announced Rapper Snoop Dogg had invested in them in January 2019, and featured him in an advert
Swedish fintech Klarna attracted 25,000 new UK users each week in the last three months of last year, as it celebrated a bumper 2018 that saw worldwide revenue increase 31 per cent to £445million.
Announcing its 2018 financial results, the ‘buy now pay later’ company backed by American rap icon Snoop Dogg says it now has 4.4million active UK users across all its different ways of paying.
Shoppers are able to use Klarna at around 3,500 UK shops, with the company partnering with household names like Asos, H&M, JD Sports, Missguided and Topshop.
Klarna said the average pay later customer in Britain used it 8.6 times in 2018, while its global sales increased 36 per cent year-on-year last year.
Klarna’s sales pitch to retailers is that it makes shoppers spend more – and more often – while offering its users different ways of going shopping before payday.
Its primary service allows users to pay for items up to a month after they’ve bought them, a service it claims comes with no interest rates, fees or charges, or formal credit applications.
However, non-payment will likely harm your credit score and Klarna will pass you onto debt collectors if you don’t pay after a certain period – usually 120 days after your initial deadline.
In order to use the service you just need a UK bank account and address, your date of birth and to be over 18.
It also comes with a ‘Slice It’ option, offered at a smaller number of retailers. This allows customers the opportunity to spread the cost of a payment into separate monthly payments.
This does require a hard credit check and credit agreement, and includes an interest rate of 18.9 per cent – which will be added to your bill if you don’t make the interest-saver payments.
Finally, it offers a ‘Slice it in Three’ option, available at the likes of Dorothy Perkins and JD Sports, which allows shoppers to split a purchase into three equal payments.
Klarna said retailers saw a 55 per cent increase in the average value of each online order after adopting it.
Luke Griffiths, UK general manager of Klarna, said: ‘2018 has been a phenomenal year for us.
‘Klarna has led the market in establishing an entirely new category with “pay later” that has proved hugely popular with today’s savvy consumers expecting more flexible, personalised and intuitive ways to shop.
‘As a result, in response to demand from customers, we’ve seen a significant rise in the number of retailers adopting Klarna solutions in the last 12 months.
‘The UK has significantly contributed to Klarna’s global growth with new merchants and heightened consumer usage, which have increased our UK footprint dramatically.
‘This winning formula will support our continued success through 2019 and beyond.’
Globally, Klarna said it attracted 26million new users and 14,498 new merchants last year.
Despite its impressive growth figures, its operating profit in 2018 was just £13.5million. The fintech is yet to go public but was valued at nearly £2billion in 2017.
This is Money previously covered Klarna in detail at the start of this year, including whether it’s a potential debt trap.
Meanwhile, we also covered a similar service – Laybuy – that has partnered with retailer Footasylum after arriving from its native New Zealand.