The Senate Banking Committee Democrats' concerns about BNPL raise important questions about consumer protection in the credit industry. At Klarna, we share these concerns, which is why we've built strong safeguards into our services from day one.

Preventing overextension and "loan stacking"

In direct contrast to a traditional credit card company, we assess eligibility before every purchase and immediately pause a consumer’s access to credit if a payment is missed. As a result, 99% of our lending is repaid—a repayment rate that speaks to both our underwriting standards and the responsible behavior of our customers.

While most credit card companies write off around 4.2% of their loans, Klarna’s rate sits at just 0.4%- ten times lower. That’s not a rounding error; it’s a reflection of a smarter, more responsible way to lend.The average Klarna customer in the U.S. has an outstanding balance of $87, compared to $6,730 as the average balance of credit cards in the U.S. 

The

• No increase in overall debt: BNPL use didn’t lead to more borrowing across the board. In fact, one in three users have no other debt, and those who try it for the first time don’t see their other debts or missed payments increase.

• No spillover distress: no impact on credit card delinquencies, utilization, or finance charges.

• Substitution, not stacking: some users moved away from interest-bearing products, showing that consumers are opting for healthier interest-free options like BNPL.

BNPL is a healthier form of credit

Americans are struggling under the weight of revolving credit card debt:

• $1.233 trillion in total U.S. credit card debt

• 46% of credit card users revolving balances month-to-month

• 60% carrying debt at interest rates up to 36%

• 25% average APR on credit cards

Klarna’s BNPL products are interest-free, with capped late fees disclosed upfront. 

Supporting smart regulation

We support smart regulation that protects consumers while fostering innovation, competition, and alternatives to high-cost credit. The conversation about BNPL oversight should recognize that transparent, interest-free installments represent progress from an outdated system that has trapped millions in over $1 trillion of revolving debt.

We welcome continued dialogue with policymakers about how to ensure BNPL serves consumers responsibly while providing a fairer alternative to traditional credit products.