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Summary
- Buy-Now-Pay-Later schemes are booming amid the coronavirus pandemic.
- With varied payment options, customers can now even make big purchases.
- Klarna, BNPL company has launched its services in the New Zealand market.
Amid the coronavirus pandemic, when the earnings have squeezed up and savings are getting exhausted, ‘Buy-Now-Pay-Later’ (BNPL) schemes have come across as a relief to the consumers.
The various BNPL options allow the consumers to purchase their desired products, payments of which can be made easily in installments.
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With such schemes, consumers can now purchase even the big-ticket items on EMI, which have been rendered affordable by BNPL options.
Must Read: Why do Millennials love Buy Now, Pay Later?
As payment through installments is getting popular nowadays, many companies are raking in the opportunity and are booming, for e.g. Afterpay Limited (ASX:APT), Affirm, QuadPay (subsidiary of ZIP Co Limited (ASX:Z1P). A Company ties up with various merchants for making the installment option pop at the time of checkout.
Do Not Miss Reading: BNPL emerges a preferred choice for online shopping during Christmas rush
Klarna Kick-Starts NZ Operations
One such company which has joined New Zealand's 'buy now, pay later' arena is the Swedish Company, Klarna.
Sebastian Siemiatkowski, Klarna’s chief executive, expressed that the Company did not deliver just a conventional BNPL payment mechanism. Since NZ's economy is already overwhelmed by numerous options in the BNPL market, Klarna is making every effort to stand out from the rest by alluring customers with an array of services.
Its application offers the customers to make purchases on a variety of stores, even the ones, which are not teamed up with Klarna. The customers can maintain a wish list, as well as keep a tab on their spending and can also evaluate their carbon emissions.
Currently, with no Kiwi employees, Klarna is aiming to recruit 20 of them in the future.
About Klarna
Operating in the online checkouts for almost 15 years, the Swedish company, Klarna, aims to make an effortless and smooth shopping experience for its customers. It has teamed up with more than 250,000 retailers across the globe and boasts of 90 million active shoppers, who have already enjoyed shopping through Klarna.
Could BNPL Schemes Lead Towards Debt Trap?
There are pros and cons of every product or services. The BNPL option is touted as a boon to the consumers across the world due to its extended payment duration.
However, many budgeting agencies often question the lack of monitoring by the government over the BNPL schemes. They are of the opinion that if left unchecked, such schemes may pose as a potential debt trap for the customers.
Also Read: BNPL stocks react after the UK proposed regulatory changes
Klarna Conducts Thorough Credit Checks Of Customers
Siemiatkowski opines that it is the moral responsibility of the BNPL companies to ensure that they constructively and productively contribute towards societal growth. The companies must ensure that the customers are able to pay for the products and not end up in debts.
As far as Klarna is concerned, the Company runs a credit check of all its customers prior to their registration with the Company. Furthermore, every transaction is thoroughly checked and scrutinised individually. If found unfit to pay, the account is immediately put on hold.
