It was only recently that Klarna's prevalence within the online shopping world allowed it to gain massive success, but its signature 'buy now, pay later' model appears to be at the heart of its downfall as consumers are increasingly failing to pay back their loans.
If you have bought any item of clothing, piece of tech, or frankly even a takeout meal in the past couple of years then there's a good chance that you've been given the option to pay with Klarna.
The fintech giant gives customers an alternative to paying the whole figure up front, letting them spread the cost over a number of smaller payments or delay it by 30 days in their signature 'buy now, pay later' scheme.
Understandably this has proven to be incredibly popular for people who want to buy something but don't quite have the money right now, or those who simply want to make sure they've got the right thing before they fork out the cash, but the company is now suffering after a growing number of Klarna users fail to repay their loans.
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As reported by the Financial Times, Klarna reported a net loss of $99 million in their most recent earnings report on Monday, which is over double the $47 million figure from the same three-month period of 2024.
Additionally, the Swedish company reported that it's customer credit losses had increased to $136 million, which is 17% higher year-on-year and represents a worrying trend for the viability of its overall structure.
Experts have pointed towards the worsening financial health of US consumers this year especially, as a growing cost of living and threats of a recession continue to target people's wallets.
Additionally, the pressures placed on consumers as a consequence of President Trump's 'Liberation Day' tariff plan have contributed significantly to this growing lack of confidence in the American economy, and is the primary reason behind Klarna's decision to not take the company public on the stock market.
People on social media have seemingly found humor in the situation though, alongside pessimism towards the viability of a Klarna-like model considering the current state of the US economy.
"You're running out of time to buy a loaded up Macbook at 0% interest and waiting for Klarna to go bankrupt," jokes one user on X, adding in a reply: "What was the plan here exactly? You can't exactly repo last month's burrito, and people with 400 credit scores don't care about their credit rating."
It doesn't seem quite the fool-proof plan as this facetious post makes it seem though, as many have warned against the dangers of debt collectors if Klarna were to go bust.
"For people who don't understand this is a joke, if they go bankrupt they will sell the debts to creditors which are not very nice people and will use any kind of method to get that money + interest back," explains one concerned reply.
"Nice try, but the bankruptcy lawyers will come after you," writes another.
While it might seem silly to be worried about debt collectors hounding you for a burger and some chips, many have argued that not paying back your loans is about as dangerous for Klarna's future as it is for your own.
This is far from the only issue that Klarna are currently facing too, as it has also recently backtracked on a major AI employee initiative, and have pleaded for human workers to return - albeit in a controversial and unpopular manner.