Never heard of Klarna? I hadn’t either until my mum had some dealings with them. She runs a handmade business selling products she mostly makes and paints herself. It’s a labor of love and she cherishes the customer base she’s worked hard to create. My mum isn’t not-savvy but she’s not the most ‘on it’ with online things, so when Klarna called her last year to get her to use their payment system, she thought it sounded like a good idea and implemented the system on her website. Only later to find she’d been tricked into signing up with them with no break down of the not-so-good side of things. And it was when a good friend purchased from her website and nearly received a CCJ thanks to Klarna, and no fault of her own, that mum physically removed their system from her site – which took a lot of time and effort for her. The whole experience was a waste of her small business budget and really left a sour taste in the mouth for how unhelpful, and pushy, their customer service was.
Then earlier this year I saw them listed as a payment method on Asos and more recently Beauty Bay announced that they were introducing Klarna as a payment method too. So I started to look into them a bit more myself…
So who are Klarna?
Well basically, they’re like any other payment method you’d see on a website. Like PayPal, but different. Basically they take online payments for orders you place at select retailers. In Stockholm where they’re founded, they’re classed as a bank because they deal with so many payment solutions in 14 different countries worldwide.
What makes them different?
The biggest and most obvious difference with using Klarna to pay for online orders is that you have 30 days to pay for your goods. Buy now and pay later kinda thing. In some cases you can also pay in installments too. All without a credit check, no fees and no interest. Which I think you’ll agree is huge for any payment vendor. It almost sounds too good to be true doesn’t it…
So what’s the catch?
Well there isn’t one…or is there? In order to test it out, I placed an order with Beauty Bay to see. It took me no longer than any other payment system to complete the transaction and I got an email from Klarna at the same time as Beauty Bay to confirm the order. It stated I had 30 days to make payment and said it would remind me as that date approached. (It didn’t.)
I got my order the next day and had treated myself to everything on my beauty wish-list. I wouldn’t have purchased all the items at the same time had I not been researching the whole Klarna system, so this post gave me a good incentive to do so. And I snapped up things like the Norvina ABH palette and the new Jouer Lip Cremes, along with a host of Wet’n’Wild products which had just launched in the UK finally. I spent £142 in total.
Come on, what’s the tea?
£142 is a lot of money to spend on a make up order. A LOT. But hey, I didn’t need to pay for it, right? Well not there and then anyway. And that’s the real problem with Klarna for me. Because there is no catch – the system works well enough in doing what it says. You’re emailed to set a reminder in your mind (or on your phone/diary if you’re forgetful like me) of when your payment is due and then apparently you’re reminded closer to the due date to actually make the payment. I can’t vouch for this because I was 8 days off my payment due date and getting really nervous because I hate knowing I have payments outstanding, so I just logged on and paid. But I would have felt a lot better had they been sending weekly reminder emails – if anything just to show they’re on it, and making sure customers are too. In the 3 weeks between my order and when I paid, I received no correspondence from Klarna at all. Nada.
But that’s the thing with Klarna – it offers a service that a lot of people will want to take up – no strings payments. Because in this day and age, who doesn’t want buy-now-pay-later on goods? But that’s the problem, they make out like they’re expecting the majority of users to be financially stable. In which case, surely you wouldn’t need 30 days to pay for your make up order because you wouldn’t buy something like make up if you couldn’t afford it outright, and thus not being financially stable, right? So that to me implies that underneath the nicey website and the implied level of customer financial responsibility, is actually a whole lot of BS. Because in a country with over £1.578 trillion of individual debt, the notion of no credit checks and no interest rates from Klarna is either incredibly irresponsible or they’re taking advantage of those who need credit purchases – often the ones with the most debt anyway.
In an ideal world, Klarna payments do offer a service and yes I do think there’s a place for their system in retail. And that place is for those who are financially stable. But with no vetting and no credit checks, it will attract the people who lack in financial sense – and I’m not knocking them, I got myself into a shed load of debt in my early 20’s because I just didn’t know how to manage money. But Klarna attracts not just the financially weak, but also those already in debt, as well as those who see an opportunity to abuse the system. Not only does it attract them, but it encourages the mentality that causes so many of our societies problems with money – the notion that we spend over and above our means. And Klarna enables and encourages that, which is a really scary thing.
If you’re good with money, pay your bills on time and not currently in large amounts of debt then Klarna can offer a useful tool if you want it to. But for me, since my debt-days I just don’t buy on credit. I don’t have credit cards or store cards and it became an imposed result of my debt to not be allowed them, that has actually become just standard good practice for me in the years since. I just don’t buy what I can’t afford. And knowing from my mum’s friend the treatment she received for not making her payment on time (that she wasn’t emailed and reminded of, like I wasn’t) Klarna became in my eyes like everyone else who ‘loans’ to those who would actively seek out buy-now-pay-later vendors: societies financially weaker members. They draw you in with the promise of shiny new toys on the made-up fairy tale that your payment date is so far away you don’t even need to worry about it. In fact, it’s practically free stuff, right, because who cares about the payment – it’s so far away. And then when the payment date passes, suddenly they turn nasty, demanding and treat you like an awful person. Much like the payday lenders who prey on the vulnerable. And while I’m not saying Klarna are preying on the vulnerable, I’m saying that the notion of pay-later-beauty is great for that percentage of people who can manage their money but just another enabling outlet for those who can’t.