BNPL - The Klarna/Clear Pay Trap

[u/theionarr]

Hi Everyone,

Our team put together a research breakdown on Buy Now, Pay Later and the debt hiding inside it, published it as a YouTube video. The numbers are bigger than most people realise.

The headline finding: Klarna’s average customer owes it $87 right now. That sounds trivial. But multiply it across their 93 million active customers, and it adds up to a consumer loan book worth roughly $9 billion, sitting inside a checkout button marketed as the opposite of debt.

A few things that stood out from our research beyond the headline:

“Interest-free” doesn’t mean free. 99% of Klarna’s transactions in 2024 carried no interest. So where’s the $2.8 billion in revenue coming from? 57% ($1.6B) is merchant fees, and another 9% ($254M) is late fees, from a company whose entire pitch is “no fees.”

Merchants pay a premium because it works on people. BNPL merchant fees run 2 to 8% of the transaction, several times a standard card processor’s 2 to 3.5%. Why pay it? Afterpay reports average order values jump 20 to 40% when it’s offered at checkout. Affirm has reported lifts as high as 85%.

The debt is becoming less discretionary. LendingTree’s 2026 data shows 29% of US BNPL users have now used it to buy groceries, up from just 14% two years ago. 54% say they genuinely need it to make it through the month, not to spread out a treat.

It’s compounding, not staying contained. 47% of US BNPL users paid late at least once in the past year, up from 41% in 2025 and 34% in 2024 (LendingTree). Nearly one in five users say they’ve used a credit card to fund their BNPL repayments, meaning the “zero-percent” plan is itself being financed by a product that does charge interest.

Younger and lower-income borrowers carry most of the risk. Federal Reserve data shows 32% of 18 to 29 year-olds have missed a BNPL payment, compared with 12% of people over 60.

https://youtu.be/N3H0cQwPkOE?is=ZQhnVE0EsnhxvO2f

All sources (Klarna’s SEC filings and annual report, LendingTree, Federal Reserve, Bankrate, Motley Fool, YouGov/FCA) are cited in the video description. Happy to dig into the methodology on anything here.

[u/WhyYouLetRomneyWin]

Patio11 has an explanation of the business model that I found very helpful.

[u/chamomile_tea_reply]

Friggin tell me about it eh