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I’ve wondered what the business model is here since klarna always advertises “interest free” loans. That option does exist, but from the actual announcement the

I’ve wondered what the business model is here since klarna always advertises “interest free” loans. That option does exist, but from the actual announcement there’s another loan option - which of course is just a payday loan: > Pay in Full allows customers to pay for what they love right away using Klarna’s seamless payments experience. > Pay in 4 allows customers to pay in four equal interest-free installments > Pay Later allows customers to defer payments to a more convenient time, such as a date that aligns with their paycheck schedules https://about.doordash.com/en-us/news/doordash-partners-with-klarna https://about.doordash.com/en-us/news/doordash-partners-with... Edit: I’m understanding now they’re also betting on missed payments just like credit cards. The payday option maybe also be “interest free” - unclear from the press release imo.

gruez 2y ago
AFAIK klarna gets a cut of the payment (similar to interchange fees for credit card payments), so merchants in effect end up subsidizing the interest-free option. It's not any different than credit cards, which you don't pay any interest on if you pay on time.
- elicksaur 2y ago
  Thanks for the context. Yeah, I’m reading up on them more now. It looks like they also make money on missed payments just like credit cards.
thworp 2y ago
The business model is essentially the same as credit cards, but with "fees" instead of interest payments. That is to say, Klarna takes a commission from merchants and the rest of their income is from people who didn't pay on time.
rchaud 2y ago
The business model is: sell your customers' purchase information to a bigger tradFi player.
api 2y ago
> Pay in Full allows customers to pay for what they love right away using Klarna’s seamless payments experience. I can get that with a debit card. Don't need Klarna for that. Obviously Klarna's target market is the financially irresponsible.
bandrami 2y ago
It's like how shariah-compliant banks can't charge interest so they charge a "lending fee" that is totally not interest

gruez 2y ago

AFAIK klarna gets a cut of the payment (similar to interchange fees for credit card payments), so merchants in effect end up subsidizing the interest-free option. It's not any different than credit cards, which you don't pay any interest on if you pay on time.

elicksaur 2y ago
Thanks for the context. Yeah, I’m reading up on them more now. It looks like they also make money on missed payments just like credit cards.

thworp 2y ago

The business model is essentially the same as credit cards, but with "fees" instead of interest payments. That is to say, Klarna takes a commission from merchants and the rest of their income is from people who didn't pay on time.

rchaud 2y ago

The business model is: sell your customers' purchase information to a bigger tradFi player.

api 2y ago

> Pay in Full allows customers to pay for what they love right away using Klarna’s seamless payments experience. I can get that with a debit card. Don't need Klarna for that. Obviously Klarna's target market is the financially irresponsible.

bandrami 2y ago

It's like how shariah-compliant banks can't charge interest so they charge a "lending fee" that is totally not interest