Klarna CEO Sebastian Siemiatkowski has championed his company’s business model and the controversial “buy now, pay later” industry.
Klarna gives customers the option to pay for an item – they can pay in advance, pay in installments or defer payment for a period of time. Critics say this allows people to buy things they may not necessarily be able to afford, although Klarna says it carries out affordability checks to ensure consumers can repay them.
In an interview with CNBC’s “Squawk Box Europe” on Friday, the Swedish entrepreneur said BNPL is “superior” to the credit card model, claiming that the average Klarna user has an outstanding balance of $50, while the average credit card user has an outstanding amount. . balance of $5,000.
Siemiatkowski went on to say that his company is “extremely recession-proof” compared to traditional credit card companies. However, the fintech reported a loss of $748 million last year and announced last month that it would lay off about 10% of its 6,500 employees as part of an effort to cut costs.
Additionally, Klarna will soon be competing with Apple in the BNPL sector after the iPhone maker announced this week that it plans to enter the market with a new product called Apple Pay Later.
This places BNPL players such as PayPal, Affirm and Klarna in a difficult position. The fear is that Apple, a $2 trillion company and the world’s second largest smartphone maker, could be pulling customers away from such services. Shares of Affirm have fallen 17% so far this week on the news.
“I think it’s one last, massive embrace of what to me is a much healthier form of credit,” Siemiatkowski said of Apple’s entry into the market.
