Klarna hails UK growth as number of customers shoots up to 7 million
Klarna, one of the fintech companies driving the ‘buy now, pay later’ trend, has revealed that the number of UK customers using its financial services has doubled to 7 million.
The company’s services allow shoppers to pay for their purchase over time when shopping online with over 5,000 merchants, including Asos, River Island, JD Sports, Boohoo, Missguided and Topshop.
Over the past 12 months, a new Klarna order was made every 1.3 seconds and more than 1.6 million UK customers have downloaded the Klarna app to date. In the second half of 2019, an average of over 88,000 new UK customers a week chose Klarna’s Pay later services at checkout.
The Swedish firm said the UK results are reflective of its global growth. Global revenues increased by 31% year-on-year in 2019, and the volume processed now amounts to over $35 billion.
Klarna is now Europe’s most valuable private fintech company, valued at $5.5 billion, and this is likely to rise further as more retailers launch the services in store. In the UK, over 500 brands have embraced the in-store service, including Schuh, Thomas Sabo and Halfords.
But despite their many benefits, pay later-style payments are starting to get a bad reputation. According to research from CompareTheMarket, as many as two million UK shoppers have damaged credit scores as a result of using ‘buy now, pay later’ schemes.
Although these services are interest-free, failing to make a payment in time could push customers into a credit trap, hurting their ability to get a mortgage, loan or even mobile phone contracts.
According to Klarna, less than 0.5% of UK customers have had their credit score impacted as a consequence of missing payments. This is because ‘Financing’ (formerly known as Slice it) is its only regulated credit product, while its ‘Pay Later’ products including 'Pay 30 days later’ and ‘Instalments’ are unregulated, which means late payments are not reflected in customers’ credit scores.
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