Buy Now, Pay Early: 97.4% of Klarna Black Friday purchases paid off on time or early

• Over half (51%) of purchases were paid off early, ahead of their due date, rebutting warnings from media and campaign groups around the dangers of BNPL
• In stark contrast, a third of consumers in the UK believed they would be unable to pay off their Christmas credit card bill in full, at a time when they are facing the highest interest rates in 27 years

London, 22nd February 2024 – Klarna, the AI-powered global payments provider and shopping assistant, has revealed UK consumers paid off 97.4% of Black Friday orders on time or early, an increase of 2% compared with last year. The data comes as Bank of England boss Andrew Bailey declared yesterday that the UK’s recession may already be over. Klarna’s Buy Now Pay Later products are always interest free and, if paid on time, incur no fee.

Over half (51%) of purchases were paid off early, ahead of their due date. In stark contrast, a third of consumers in the UK(1) did not think they would be able to pay off their Christmas credit card bill in full, at a time when credit card interest rates are at their highest in 27 years according to Bank of England data, while banks continue to report their biggest annual profits since the 2007 financial crisis. 

In 2023, Klarna processed a record number of Black Friday orders, as consumers shun  predatory credit cards in favor of interest-free BNPL options. Klarna continues to grow, with over 18 million UK customers and its fastest-growing age group being the over-60s, showing that all generations see the benefits of BNPL as a healthier credit option to credit cards. 

The data rebuts numerous warnings from media and campaign groups around the dangers of BNPL and correlates with a recent report published from Experian. Unlike most reports on BNPL, Experian’s is based on real-world transactional data. The report found that those who use BNPL are 13.4% less likely to be over-indebted or behind on all credit payments than people who don't use BNPL.

“Our BNPL products offer a fairer alternative to predatory credit cards, with short-term payment cycles and no ability to revolve. It’s not in our interest to lend to those who can’t afford to repay, which is why we make a new lending decision on each and every transaction, and restrict the use of our products if repayments are missed. By publishing this data, we hope to show that our consumers are smart and responsible shoppers,” said Raji Behal, Head of Western and Southern Europe at Klarna.

To discourage late payments, in March 2023 Klarna launched a £5 late fee for payments made after a seven-day grace period and a minimum of four friendly reminders. Each fee is capped at 25% of the order value and there will be no more than two fees per order, meaning the maximum fee would be £10. In May 2023, Klarna launched the industry’s first Credit Opt Out feature, giving consumers the power to switch off access to Klarna’s credit opt out products at checkout. These innovations, in addition to the other safeguards, mean that Klarna’s default rate remains below 1%, 30-40% lower than credit card companies. 

Footnotes

(1) Survey findings are based on the result of a survey of more than 1,000 consumers aged 18-75 in the UK, fielded October 2023, conducted by the research agency Nepa. The sample sizes are nationally representative, naturally including both Klarna users and non-Klarna users, and were selected by the research agency