By Ryan Ermey
Popular Buy Now, Pay Later firm Klarna reported continued losses for the quarter that ended in March, despite an expanding user base and growing revenues. The company attributes much of the losses to one-off expenses, such as corporate restructuring.
Users of BNPL services have reported problems, too. Some 4 in 10 say they paid late on at least one of them in the past year, according to a recent survey from LendingTree.
Still, these services are becoming more and more prevalent of late, with BNPL firm Affirm inking a deal with Costco and Klarna partnering with DoorDash, the latter prompting a spate of memes about U.S. consumers financing their burritos.
The services have their share of skeptics in the financial community.
“Buy now, pay later programs are a scam,” Douglas Boneparth, a certified financial planner and founder of Bone Fide Wealth, recently posted on LinkedIn. “They encourage overspending, destroy credit, saddle you in debt, and target consumers who are most susceptible to borrowing when they shouldn’t. Society would be better off without them.”
‘Credit is a tool’
The truth is, Boneparth acknowledges, in the right hands, BNPL services can be useful.
“I’m being a little tongue-in-cheek in the post,” he says. “I think the overall principle here is that credit is a tool. If you’re using credit with discipline and knowledge and understanding and control around your financial situation, it can be an incredibly effective tool.”
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