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Shortly after moving from the US to Germany, I was asked to investigate Klarna as a solution for payment processing for my company. I was pretty ill-suited for
by lgbr 11y ago
Shortly after moving from the US to Germany, I was asked to investigate Klarna as a solution for payment processing for my company. I was pretty ill-suited for it, as I had no idea about paying by 'invoice'.
Payment by invoice means that when you order a product online, you simply receive an invoice along with the product when it arrives, and you're trusted to pay for the item on the invoice within the next few days or weeks by way of a direct bank transfer.
I found the process quite foreign to me, but the availability of fast and cheap credit checks made this possible. Companies like Klarna maintain and/or license a database of people in the country who have a history of failing to pay their invoices, and they are denied when they order products from other websites in the future.
What I'm wondering here is, how are they going to pull this off in the US? There are credit checks, but they really only apply to whether you've made loan payments or declared bankruptcy recently, and wouldn't reflect if a company has a claim against you.
- mkorfmann 11y agoThey are probably doing the credit checks themselves, by aggregating a bunch of public and or private data and doing the analysis on their own.
- almog 11y agoWell, nowadays klarna is offering more payment options other than invoice, and that's (one) way to build clients' database. If for example, you used credit card, perhaps you'll be eligible for invoice the next time you pay.
- alkonaut 11y agoI'm not so sure you have to be very thorough doing credit checks. Klarna has a rumor of making more money from customers who don't pay (on time) than from those who do. Added late-fees and selling the invoices to companies who handle bad credit can be pretty lucrative.
- seivan 11y agoIt's not a rumour, it's their business model. I a have no opinion on it myself, but that's how they roll, they collect debts.
- kpil 11y agoThe initial invention was this very quick algorithm for risk assessment. What they do really quick is a credit check, based on what they know. They may also use third party suppliers the first time (or more?) if they do not have enough data. I am not actually sure if they "buy" the invoices, but they collect a fee for reminders and handling if the payment is late.