Higher interest rates and recession concerns are challenging the business model behind services such as Affirm, Klarna and Sezzle, which say they are tightening credit standards to focus on making a profit, rather than growth. Some customers say they have been caught off guard by unexpected denials or lower spending limits when they try to make purchases.
“We will lend a little less sometimes, especially to new consumers, supporting them to make the right decisions for them and for Klarna in changing economic circumstances,” the Swedish fintech company said in its annual report.