Those following the fashion industry closely have probably noticed the name Klarna popping up again and again among the headlines. The Swedish fintech company, which raised 460 million US dollars (approximately 368 million pounds) in equity funding in August, has announced a series of fashion partnerships over the last six months, including Toms, Man Repeller, Superdry, Quiz, Rue 21, and Abercrombie & Fitch, not to mention the expansion of its global contract with H&M. Additionally, Klarna became a patron of the British Fashion Council in April.
Klarna offers online shoppers two alternative check out options: either delaying the payment in 30 days, or paying in up to four installments without interest or fees. The merchant receives the payment straight away from Klarna, which handles the repayment directly with the customer from then on. Some 130,000 retailers work with Klarna around the world, including Asos, Topshop, Zara and Michael Kors. In the UK alone, over 5 million consumers have used the company’s services, of which 2.5 million have chosen the “buy now, pay later” option.
The company’s meteoric rise can be attributed to millennials and generation Zs, who have spent nearly half of their lives in a post-crash world. According to Deloitte’s 2019 Global Millennial Survey, millennials who entered the labor market around the recession experienced less economic growth in their first decade of work than any other generation. “They have lower real incomes and fewer assets than previous generations at comparable ages, as well as higher levels of debt,” says the report. In the United States, student debt is one of the most significant forces holding millennials down. Around 41 percent of US millennials hold a student debt, as per a 2015 report. The graduating class of 2018 owed over 29,000 US dollars in student loans — more than ever before, according to the Institute for College Access and Success. That may explain why 60 percent of American millennials do not own a single credit card.”
