Buy now, pay later service Klarna has seen a boom in business during Britain’s lockdown. However, it tightened its rules on lending as a result of the financial uncertainty caused by the UK’s lockdown as well.
The following numbers reflect which categories have seen the biggest boom: 105% increase in the number of running shoes purchased using Klarna’s services, a 60% hike in beauty product sales, and “significant uplift” in purchases of bicycles and cycling accessories.
“We saw our volumes increase during that period just reflecting the increase in digital transactions generally,” Luke Griffiths, Klarna’s vice president, told BBC Radio 5 Live’s Wake Up To Money.
However, as sales increased but more shoppers faced the financial uncertainty of lockdown, the company did tighten its rules on lending.
“Obviously with people’s financial circumstances changing during this period, we have constantly reviewed our policies around the type of customer that we accept,” Mr. Griffiths said.
In a recent survey, Klarna found out that over two thirds (67 %) of shoppers use the service to help manage their finances and spread the cost of more expensive purchases, and almost half (49 %) used the ‘try before you buy’ for convenience.
Luke Griffiths also says the firm is only accepting customers who it believes will and can repay on time. As a result, he does not believe Klarna will see an increase in defaults, despite rising levels of financial hardship.