As inflation tightens wallets and credit card interest soars, many shoppers have leaned on buy now, pay later (BNPL) plans to make ends meet. But this growing trend may be facing a reckoning—especially for one of its biggest players.
Klarna, the Swedish fintech known for pioneering short-term installment loans, is now under scrutiny as it reports rising consumer losses. And the question echoing across the financial world is unsettling: Is Klarna going bankrupt?
Klarna Losses: A Closer Look at the Numbers
In its latest earnings disclosure, Klarna revealed that consumer credit losses rose by 17% year-over-year in the first quarter, hitting $136 million. This uptick mirrors wider concerns in the industry, as more Americans fall behind on BNPL payments.
While Klarna insisted the rise is due to an overall increase in loan volume, its global delinquency rate—meaning loans that went unpaid—inched up from 0.51% in 2024 to 0.54% this year.
A spokesperson for the company downplayed the risks, saying Klarna sees “no sign of a weakened U.S. consumer.” But lending analysts see red flags that go beyond a few missed payments.
Klarna said its customer credit losses had risen 17% to $136mn
More People Using BNPL—and Missing Payments
BNPL services like Klarna, Affirm, and Afterpay allow consumers to split payments into smaller, interest-free chunks. The pitch is simple: no credit checks, no traditional loans, and no waiting. It’s fast, convenient, and for many users, irresistible.
But that ease of access comes with hidden risks. According to recent reports by Bankrate and LendingTree, a growing percentage of BNPL users are now falling behind:
- 1 in 4 use BNPL because it’s easier to get than credit cards.
- 4 in 10 have missed payments in the past year—up from 1 in 3 a year ago.
Financial experts warn this signals a worrying trend of overextension, particularly among younger consumers and financially vulnerable populations. A Federal Reserve study found that Black and Hispanic women, in particular, are more likely to use BNPL services and more likely to be affected by payment delays.
“Consumers’ financial positions feel more spread thin than they have in a long time,” said Justine Farrell, a marketing professor and BNPL researcher. “The cost of food is up, rents are high, and BNPL is filling in the gaps—but at a cost.”
Is Klarna Going Bankrupt?
So—is Klarna going bust? The short answer is: not yet, but warning signs are flashing.
Despite losses, Klarna remains a global fintech leader. Its user base and revenue have grown steadily, and it continues to strike major partnerships—like a recent deal with DoorDash that raised eyebrows (and memes) about people financing fast food.
Still, the irony isn’t lost on critics. When festivalgoers are taking out loans to buy Coachella tickets, or sneakerheads are financing purchases in four parts, the BNPL trend looks less like innovation and more like a potential bubble.
Some argue Klarna is simply the canary in the coal mine—a leading indicator of strain in the broader consumer finance space.
Deregulation Adds to Consumer Risk
To make matters worse, U.S. regulators have rolled back oversight of BNPL platforms. The Biden-era regulation that treated BNPL plans like credit cards—requiring clear disclosures, dispute resolution, and refund protection—won’t be enforced, the Trump administration recently confirmed.
Consumer watchdogs warn this leaves shoppers exposed.
“By taking a head-in-the-sand approach to fintech loans, the CFPB is favoring Big Tech at the expense of everyday people,” said Adam Rust, of the Consumer Federation of America.
Without federal enforcement, platforms like Klarna can continue to expand with fewer restrictions—even as default rates tick up and consumer complaints mount.
The Bigger Picture: Klarna and the BNPL Boom
Klarna isn’t alone. The top six BNPL providers, including PayPal, Sezzle, Zip, and others, originated over 277 million loans worth $33.8 billion in 2022—about 1% of all credit card spending.
What started as a convenient credit alternative has grown into a shadow finance empire. But with limited regulation, opaque fee structures, and a user base increasingly unable to repay, cracks are beginning to show.
And Klarna? Its growing losses might just be the first fissure.
Final Takeaway
While Klarna isn’t going bankrupt right now, its rising consumer credit losses, loosening regulations, and signs of borrower distress paint a complicated picture. As BNPL use skyrockets, so too does the risk—both for the companies offering the loans and for the people relying on them to get through everyday purchases.
Consumers should tread carefully. For now, Klarna is holding its ground—but the storm clouds over the buy now, pay later industry are getting harder to ignore.
