“We are closely monitoring the changes in the macroeconomic environment,” said Pay, after buying now.
Swedish payment startup Klarna said its net loss doubled in the first quarter.
Klarna offers users interest-free consumer loans to make retail purchases. The company generates revenue by charging consumers who don’t repay the loan on time.
Concerns surrounding consumer financial health can cause bleeding into the credit market.
Online financial services platforms remain popular with 100 million active customers. This has led to over $700 million in revenues over the first three months of 2025.
Klarna noted that the short term of the loan allows organizations to “respond quickly to evolving market conditions.” 83% of your loan portfolio will be renewed within three months.
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Last year, Klarna actively expanded its reach in the US market.
Other companies are jumping on BNPL bandwagons.
Despite Klarna’s growth, market watchers have questioned whether the company is vulnerable to slowing economic conditions, particularly as consumer sentiment gets worse.
The company believes it can navigate the potential turbulence of the US economy.
“We are closely monitoring the changes in the macroeconomic environment. We continue to see the widespread adoption of our commerce network, but Klarna is well positioned to adapt quickly when needed,” the company said in a revenue statement.
More BNPL users are delayed
A recent survey found that more consumers were behind BNPL loans.
The report also highlighted some trends in the BNPL market. A quarter of BNPL users said they bought groceries with BNPL options, with 23% saying they have more than three active BNPL loans at a time.
Although the numbers vary, many US households live on payroll. The results show that a growing number of consumers view BNPL’s funding options as a bridge to their next payroll.
In recent years, buy now and later payments have become a popular alternative credit product for consumers. As new consumer payment methods are more ubiquitous, economists have studied their effectiveness.
People will shop at grocery stores in New York City on March 12, 2025. Samira Bouaou/The Epoch Times
“BNPL offers credit to financially vulnerable consumers, but these same consumers may be overexpanding themselves,” the Fed economist wrote.
“This concern is consistent with previous research showing that consumers spend more when BNPL is offered at checkout, and using BNPL increases overdraft fees and credit card interest payments and fees.”
Zhu Wang, Vice President of Research on Financial and Payment Systems for the Richmond Federal Reserve, says the future of BNPL is worth considering.
The UK economy secretary at the Treasury Department said the BNPL landscape has been “active as a wild west for many years” and “consumers are exposed.”
Consumer status
U.S. household debt has failed in the last decade, reaching an all-time high of $18.2 trillion in the first quarter, according to data from the New York Fed.
The figures highlight the rise in overall delinquency rates. The regional central bank reported that the total delinquency rate rose to 4.3% from the previous quarter, driven primarily by a surge in student loan delinquency.
Research has shown that high inflation and rising interest rates (average US credit card rate of around 24%) have contributed significantly to consumers’ inflated debt levels over the past few years.
Economists are not panicking, primarily because their household balance sheets are in good condition.
TD Economics economist Ksenia Bushmeneva says he has put together a “wealth cushion” that will allow households to support them in uncertain economic situations. This is driven primarily by the strength of the stock market and the accumulation of wealth in key real estate, Bushmeneba notes.
“Given the extraordinarily large policy uncertainty and stock sales, households may choose to step carefully until the future appears to be more certain.”
One of the challenges is that most individual wealth is inaccessible to spending.
“The gradual easing in consumer spending momentum is not just a decline in inflation, but the number of transactions has also been cooled,” the report said. “Consumers seem to be pulled back, especially with discretionary services for larger tickets, such as airline tickets and accommodation.”
