Klarna Seeks Growth Beyond Buy Now, Pay Later As Its Stock Goes Public

These days, much group are tapping into buy now, salary later plans for everything from apparel to performance tickets.

How it works: In galore cases, group return retired mini loans, which transportation nary liking and are paid backmost successful increments complete little periods of time.

“I deliberation it makes it amended for consumers because it’s an action to where, if thing happens, I person an easy entree to acquisition something,” Randis Dennies, of Memphis, Tennessee, told NBC News.

He said he uses nan costs method for groceries, airfare and different purchases. His bargain now, salary later institution of choice? Klarna.

Founded successful Sweden 2 decades ago, Klarna made its U.S. banal marketplace debut Wednesday pinch an offering it had delayed earlier this year. After nan closing doorbell Friday, its worth stood astatine astir $16 billion. (Rival Affirm has a marketplace capitalization of much than $27 billion; PayPal's is astir $64 billion.)

Klarna has much than 26 cardinal users successful nan United States, and now it wants to beryllium known for much than conscionable bargain now, salary later, including done launching a caller paper and getting progressive successful mobile telephone plans.

“We look astatine nan U.S., we’re like, wow,” CEO Sebastian Siemiatkowski said successful an question and reply for "NBC Nightly News." “We tin connection products that are truthful overmuch much affordable, truthful overmuch better, and we tin still make money.”

Some of Klarna’s description plans, however, person been met pinch disapproval — its business pinch nan nutrient transportation work DoorDash, for instance. The news lit up nan internet, pinch societal media posts informing group against going into indebtedness for a burrito aliases a pizza.

Siemiatkowski pushed backmost connected nan worries.

“The truth is that Klarna doesn’t only do credit. Twenty percent of our transactions are debit wherever group salary nan afloat amount,” he said. “So we’re overmuch much for illustration a PayPal wallet.”

Buy now, salary later, for each of its easiness and inferior successful a pinch, has nevertheless triggered warnings from regulators, lawmakers and financial experts.

“It’s convenient for group that don’t person a in installments paper aliases don’t want to salary nan precocious liking fees associated pinch nan in installments card, but it besides leads to a batch of impulse buying and perchance different risks,” said Investopedia Editor-in-Chief Caleb Silver.

A caller study by LendingTree showed 41% of bargain now, salary later customers said they paid precocious astatine slightest erstwhile successful nan past year. That’s up from 34% nan twelvemonth before. If group miss a payment, they whitethorn person to salary precocious fees aliases beryllium charged interest, depending connected their plans.

Klarna said nan immense mostly of its customers salary connected time, contempt a recent mini uptick successful in installments losses. But Siemiatkowski, nan CEO, besides acknowledged that users tin get successful complete their caput pinch short-term loans.

“For sure. And I mean, arsenic immoderate shape of credit, they will, right?” he said. “But if I look astatine nan existent outcomes, I cognize our losses are 20, 30% little than in installments cards. So I cognize nan merchandise is healthier, but it’s still credit.”

Still, bargain now, salary later is an action galore consumers are gladsome to person successful a play of economical uncertainty defined by precocious liking rates, stubborn inflation and signs of weakness successful nan occupation market.

“As agelong arsenic they let maine to usage Klarna, I will beryllium utilizing Klarna,” Dennies said.