The buy now/pay later craze already has retailers demanding lower fees, according to Klarna Bank AB.
“I wish I could convince them to pay 6% but it was a long time ago that I heard any deal quoted at those levels,” Klarna Chief Executive Officer Sebastian Siemiatkowski said in an interview with Bloomberg Television. “The price has dropped due to competition.
Buy now/pay later options now litter retailers’ websites around the world with credit-card-wary consumers using them to break up purchases and pay them off over time, often without any interest. In the U.S., the number of people who’ve tried the services has climbed 300% every year since 2018.
The Consumer Financial Protection Bureau warned last month that it was probing the burgeoning industry, which it said charges merchants between 3% and 6% of a purchase price every time a consumer uses the options at checkout. As part of the inquiry, the agency ordered Klarna and many of its top rivals to submit information about industry practices and risks.
“As competitive forces pressure the merchant discount, lenders will need to find other sources of revenue to maintain growth and profitability,” the CFPB said last month. “The bureau would like to better understand practices around data collection, behavioral targeting, data monetization and the risks they may create for consumers.”
Klarna welcomes the agency’s review, Siemiatkowski said, noting his firm already works with regulators in countries where it does business.
“I would, at this point in time, call it more of an inquiry than an investigation,” Siemiatkowski said. “With that said, I think it’s healthy. There may be aspects of products where regulation should be improved.”
