And it is that the case of Afterpay is not isolated, as evidenced by Klarna, a Swedish start-up that also specializes in payment solutions and fractionation of purchases without interest. Its positioning was the protagonist of one of the events held at the last Cannes Lions festival, where the ability of this firm to create its own identity in a disruptive way was revealed. This has been possible thanks to the creative work of the Nord DDB agency, responsible for the “Smooooth shopping” tagline, a motto that reinforces the calm and relaxed sense of payment that all these services provide rab bangladesh email address.
This communicative proposal has contributed to consolidating the importance of Klarna, which in June closed a financing round of 525 million euros after its valuation shot up 47% in the last quarter, reaching 37,500 million euros. In addition, it should be noted that this Swedish fintech is focused on Spain, where it has created 500 jobs. Like Afterpay, Klarna bases the success of its model on attracting the youngest consumer, to whom they offer amounts that do not exceed several thousand euros, but they do so without interest.
The direct profit of the BNPL comes from what they charge the merchants and due to the average amounts that are handled, these apps are not subject to the legal credit conditions, so they do not have to review the history of their clients, which they just have to put their name, address and date of birth. This ease in the process is another of the pillars of its success among the younger target with consumer capacity such as Generation Z, who shuns the traditional and more financial terminology applied by credit cards. Likewise, the “buy now, pay later” methodology has created a symbiosis with another established consumer habit such as subscriptions. Thus, your fees are integrated as one more payment in this set of digital expenses.
This context of use has allowed Klarna, founded in 2005 by three students from the Stockholm School of Economics, to achieve agreements with brands such as H&M, Asos, Ikea, Macys, Sephora, Samsung, Ralph Lauren or Nike. One of its main markets is the United Kingdom, where 37% of young people use BNPL payment methods, according to a Finder study. Of all the providers, Klarna is the preferred one, with almost half a million active users per month who opt for this service due to its intuitive nature. It is ahead of other apps such as My Argos Card, Clearplay (the Afterpay brand in certain countries), Laybuy and OpenDay.
By age group, half of Generation Z use these types of deferred payment, the percentage being 54% among millennials, 37% among Generation X; 23% among Baby boomers and just 12% in the so-called silent generation.
Precisely, the British market, due to the volume of operations registered with BNPL, has set off alarms in some sectors. And it is that with the increase in the volume of customers, defaults have also increased, especially in the first operations. According to critics of this model, this is because the “buy now, pay later” model encourages irresponsible consumption, so Britain is preparing stricter legislation in this regard.
However, this first horizon of limitation will not reduce the growth of the BNPL, as other recent movements point out. It is enough to cite the Apple Pay Later project in which Apple and Goldman Sachs work, as reported by Bloomberg. The formula of this system would consist of offering four interest-free payments that would be made every two weeks or in several months. The objective would be to reinforce the use of the iPhone as a payment method to the detriment of standard credit cards.
Other data that would support the growing commitment to this payment formula is that the expense per purchase with BNPL increases between 10 and 40%. Also, some brands are using these services to dispose of old stock and it is a valuable resource for retailers socialposts.
