Recently, after raising capital from investors ranging from Snoop Dogg to Silicon Valley investors groups such as Drangoneer, Klarna’s value skyrocketed to $5.5 billion. They are now looking to expand to the US. This is big news. It reveals how fintech and retail make for a match made in monetary heaven. Moreover, it shows how aggressively marketing to millennials and Gen Xers can be a boon for financial companies.

However, is their pay-later scheme something that its mainly millennial customer base can trust?

As detailed by the Guardian, the benefit to using Klarna when shopping is that it allows you to pay later for online order. If you were to buy from one of the many clothing retailers that offer Klarna, which range from high-end to high-street, then you could buy a whole new wardrobe without having to pay anything upfront after a soft credit check. Most importantly, there is no interest or any other kind of fees. This allows you to try them on, and return ones that don’t fit and only pay for those that you keep. This removes the monetary barriers to retail therapy by not having to wait for your previous returns to be refunded back to you. However, what is important to note that if you fail to pay after 30 days, your details could be passed onto a debt collection agency affecting your credit score.

Klarna also offers another service called “Slice-It”. Although the attention-grabbing name disguises it, this is basically a millenial-marketed form of credit under a different name. “Slice-It” allows you to split your payments into up to 36 months worth of separate payments after a hard credit check which could affect your credit rating. If you opt to pay the minimum payment rather than the interest-free payment, you are looking at the remaining balance incurring interest at a variable rate of 18.9%. For millennials who rely on increasingly precarious gig economy jobs, this could be lethal. Adding insult to injury, this service has run into controversy previously with mattress-retailer Casper having to withdraw its Klarna-run credit service due to a lack of specification from the Swedish bank on whether a credit broking licence was needed.

Consumerism and easy credit make for a nasty pair

For me as a millennial who is already in debt thanks to his student loans, there is something unethical about rebranding credit to appeal to the under 30s. The selection of millennial-focused brands is not something done by accident. Klarna did this so they can aggressively market to this already debt-saddled demographic. Many of us who have decided to study in order to mark ourselves out in an increasingly competitive work environment are already in debt with interest rates up to 6.3%.

Klarna encourages us to spend more on what we’ll wear on our next night out without thinking of the financial consequences. Whilst some argue that it is our choice to do so, our consumerist culture actively encourages this. Every day we see Instagram influencers on our feed cavorting in the latest fast-fashion trend. It can be hard to resist when you are bombarded with it daily. Klarna has tapped into our desire to buy what we see on Instagram before payday by partnering with retailers like TopShop and ASOS. In doing so, our spending has increased with these retailers which Klarna capitalises on through merchant transaction fees from retailers. This has led to their success but at what cost to the millennial wallet?

As Klarna expands (and its services along with it), only time will tell.