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“Shop now, pay later” may not sound like the words of financial prudence. However, this is the motto of Klarna, an online bank that has seen its popularity catapult in the past two years. The bank, founded in Sweden in 2005, has over 85 million consumers across the world to date, including over 8.6 million users in the UK alone.

Klarna acts as the middleman between buyer and seller, popular for its services helping consumers spread big payments across a period of time (so that you can “buy what you want, when you want it”). The brand, with a sleek pink and black colour palette, targets budget retailers (i.e. Missguided, Pretty Little Thing, Asos, etc.), making it popular with Gen Z and young millennials.

Aesthetics aside, Klarna also promises no late fees and offers a variety of flexible payment time frames (from 30 days to “6-36 month financing” options). While it offers services for businesses, Klarna’s fame comes from its offerings to individual consumers who are looking to split a payment across a period of time.

Klarna, amongst other “shop now, pay later” services has received criticisms for encouraging bad spending behaviors. Last month, the Evening Standard it as the “cool lender getting Gen Z hooked on debt,” reporting on a number of case studies who found themselves deeply in the negatives after using the service too excitedly.

Most people’s concerns don’t seem to be with the services offered by Klarna itself, but rather the way they feel it has marketed itself to, as journalist Clare Seal says in an for i, “young consumers with little experience of managing credit”. Much like subprime mortgages were criticised largely because they made it too easy for people with little credit experience to get into debt, Klarna’s critics worry that the bank’s main users are vulnerable to dangerous financial consequences.

It’s easy to be cynical, and wonder if the bank is set out to target young shoppers into debt.

Grace Dembowicz, a 22-year-old journalist in London, says the app’s long refinancing options initially make you feel better for not spending large sums immediately: “Whenever I’ve used Klarna it’s always been when I’ve been trying to be a bit more thrifty and save money. At first it does feel like you’re not spending the amount you are and it feels kind of guilt free.”

Tanya Burns (not their real name), 21, works in a clothes shop in London disagrees with the idea that the app corners people into debt, arguing that Klarna can’t be responsible for people’s spending habits. “Klarna knows their customers, and I feel like whenever I’ve used it I’ve always felt like there are resources available to help me if I struggled,” she says.

However, for all the mistrust associated with Klarna, the bank has set out to purport its brand as a young, hip, but responsible, service. The lockdown has been interesting for the brand.

“We’ve had 30% growth in the past six months with purchases in leisure, sport, and tool building,” explains corporate communications consultant Daniel Greaves, “The average age of a Klarna consumer is 33 but our fastest growing group of consumers is 40-50 year-olds.”

It would seem that while the brand is becoming more mainstream across a larger number of age groups, its biggest demographic is still young millennials and Gen Z consumers. For example, the start of lockdown saw the demographic increase spending in the home and garden category alone by 262%, which Greaves explains is why it’s important to make that customer base feel supported.

Last month Klarna announced , an initiative it hopes will “encourage consumers to shop smarter by purchasing the right things, at the right time,” with the aid of retail psychologist Kate Nightingale.

Luke Griffiths, the Chief Commercial Officer for Klarna, said the company has “an important role to play” in promoting responsible shopping. While not sounding initially immersive, KlarnaSense is more resource and content-heavy than one may think. Other than articles with advice and “mythbusters” about spending, it also provides a personality quiz to advise users on “what type of shopper” they are. More than anything, it seems like a way to simply let shoppers know that the service isn’t out to get them, and that support is available.

Greaves explains that the je ne sais quoi of KlarnaSense comes from the idea of “Mindful Money” (which is also the name of another content hub Klarna set up to help Gen Z be more informed about money matters), a movement in which the discussions around financial literacy are demystified and made simpler for shoppers. Klarna has also replied to tweets jokingly blaming the app for their spending problem, encouraging users to read its guide on how to shop smarter.

Promoting more sensible shopping when it comes to a credit service is a difficult line to tread - undoubtedly one which can hinder Klarna’s competitiveness in the “pay-later” space, as demonstrated by its disagreement with Afterpay on the importance of credit checks on consumers. Afterpay argues that credit checks don’t demonstrate the lending profile of a consumer accurately, whereas Klarna believes they are important to the sustainability of the industry’s future.

It would seem a can of worms has been opened around the extent to which fintech companies’ ever-efficient offerings can be regulated and controlled. Whether you choose to shop with Klarna or not, services that make buying easier will continue to increase in popularity with young people - it remains a matter of time to see if KlarnaSense can help them all.

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