Fintech firms enabling "buy now, pay later" services are on the rise, highlighted by Klarna's recent $5.5b valuation. Clever marketing and the benefits to both the store and payment financing provider are part of the surge in popularity, but these services also carry dangers such as consumers spending more than they can afford.
The concept of ‘buy now, pay later’ fintech firms is simple. Instead of paying upfront for goods such as clothes and accessories, you can purchase them in separate, often monthly, instalments or simply at a later date on interest free credit at the point of sale. Companies that offer this are seeing great success; their service is the perfect solution to buying goods without the immediate consequences. However, such firms face increasing criticism for enabling, even encouraging, impulsive and reckless spending.