Difference between revisions of "Klarna"

Revision as of 23:44, 12 March 2021

Klarna is a Swedish payment company whose aim is to constantly transform the way people shop, pay, and bank into something internationally "Smooother". Klarna "makes shopping smoooth" with the flexibility of payment method options, interest-free payments, and no credit score impact. Klarna allows users in the United States to pay in 4 interest free installments and users in the UK to pay in 3 interest free installments. Klarna also has flexible payment methods that users can use when buying something through Klarna with the payments disconnected to the impact on the users’ credit score. ^[1]. ^[2].

Klarna was overall built on the concept to give consumers an option where using a credit card is their last resort when online shopping. ^[3]. Klarna makes this possible due to their international success that started in 2005 and the constantly growing numbers of investors, like H&M and Snoop Dogg, to name a few, that highlight the option of buying something online instantly while being able to pay it off fully in 4 payments ^[4]. In the most current and updated version of their app, Klarna offers a vast variety of well-known retailers they are partnered with in addition to outside affiliations and websites that accept Klarna. By shopping through the app, Klarna appears as one of the options when users are ready to purchase ^[1]. This experience for users is seamless and normal like any other online shopping transaction.

The goals and objectives of Klarna come full circle with the relationship that is fostered with their users, investors, and employees everywhere. As the company continues to grow, Klarna hopes to branch into a fully-fledged bank ^[4].

History

Klarna began in 2005 when three entrepreneurs, Sebastian Siemiatkowski, Niklas Adalberth, and Victor Jacobsson, decided to make their vision reality and start up their company after being ranked last in a "Shark Tank" like pitch holding audition. Their motto for this pitch was and remains "Buy now, pay later" but was first named Kreditor Europe AB for the reason it sounded more serious and trustworthy. Klarna's success and expansion to international markets has changed the online shopping experience for many people who prefer the option of paying in 3 or 4 different installments than all at once ^[4]..

Kreditor Europe AB continued to expand to Norway, Finland, and Denmark from 2006 to 2008. From 2009-2011, they expanded to international countries outside of Europe leaving behind their starting name and rebranding as what it is known today, Klarna. Big name companies and retailers were investing in Klarna because of the increase in success of the company and large expansion overseas. Not only was Klarna expanding and succeeding, but on the other end of the spectrum, their retail partners also noted double to triple the amount of sales overnight^[4].. It is a win-win situation for both Klarna and its investors and their retail partners. In 2019, Klarna had many more investors. While this is happening, Klarna is ranked the highest valued private fintech company in Europe as well as ranked 6th in the world. Current data shows that Klarna is still growing and improving their company. Their rankings are well accompanied by the little over 90 millions consumers who use Klarna as well as their 200,000 retail partners to date ^[4].

Klarna is available to people across three continents that averages at one million transactions per day. Klarna has grown exponentially since its early start up day and now has over 3,500 racially and ethnically diverse employees ^[4].

Ethical Implications

Online shopping in 2005 was not as prominent as it is currently in 2021, but the success of Klarna over the years has proved to be well needed by many people who use it in the present day. With the Coronavirus pandemic, online shopping practically became an essential part of quarantine life. Additionally, people lost their jobs due to the pandemic and splitting online shopping costs into payments could be considered a basic necessity to survive.

Klarna, along with other buy now and pay later companies, have taken the attention away from credit cards and focused it on the simple act of purchasing as normal without the worry of credit score being affected. Klarna can be perceived differently by different groups of people. It may appear as a guilty pleasure that allows them to spend money that is not yet available; arbitrary and weird innovative concepts; or impacting the societal handling of money and societal monetary implications ^[3]. All in all, Klarna is available to the users who are interested in trying it out, users who need the 3 or 4 payment installments to pay off a purchase, or users who just want to see what the hype is about ^[5].

Klarna’s main offices in the United States are located in Los Angeles, California and New York City, New York. The CEOs of Klarna have been constantly advised to move their offices out of Sweden, LA, and NYC into Silicon Valley due to the immersive and exponential growth it can create for them ^[3]. However, Klarna’s CEO has set that advice to the side because they are happy with the growth the company has experienced in Sweden. Sweden is one of the most successful countries and societies altogether in the world that generates a platform for people to be successful. This is clearly visible with the success Klarna has experienced, and that in itself demonstrates the characteristics and morals of the country ^[3].

References

1. ↑ ^{1.0 1.1} There is a new way to shop in town. https://www.klarna.com/us/ accessed March 12 2021.
2. ↑ Flexible payments for pet owners https://search.proquest.com/openview/53823c68fa6c8044a5e49165b56f42f2/1?pq-origsite=gscholar&cbl=2041027 accessed March 12 2021.
3. ↑ ^{3.0 3.1 3.2 3.3} Making Sense of Klarna https://techcrunch.com/2020/12/08/making-sense-of-klarna/ accessed March 12 2021.
4. ↑ ^{4.0 4.1 4.2 4.3 4.4 4.5} 15 years of making shopping smooth https://www.klarna.com/international/klarna-15/ accessed March 12 2021.
5. ↑ Ethical Instructions for Merchants https://cdn.klarna.com/1.0/shared/content/policy/ethic/en_gb/merchant.pdf accessed March 12 2021.