Klarna’s report explains the cost of traditional credit systems in the UK
By Joy Dumasia
Klarna’s quarterly global Pulse reports underline consumers’ difficulty understanding the costs of using “traditional” payment methods, such as credit cards, and their overall shopping and money management behaviour.
Almost half (48%) of consumers shop online in the UK at least once a week, up 26% from Q1, leading to a shift away from cash and towards credit and debit cards and other alternative payment methods.
The majority of UK consumers (66%) own at least one credit card, with 23% of them using it as their primary card for purchases and 43% for emergencies or sporadic high ticket purchases. However, almost two thirds (59%) would instead go to the dentist or do household chores than read their credit card’s fine print or work out the cost of its APR.
When it comes to payment preferences, a quarter (26%) of UK consumers have used BNPL, enabling them to defer payments or pay in instalments. While most people have heard of BNPL (85%), the research also found that only a quarter (26%) have used it, explaining the high level of confusion about how BNPL works among non-users. A quarter (24%) of people who hadn’t ever used it thought BNPL attracted increased interest.
Alex Marsh, Head of Klarna UK, commented: “It’s clear that over a year of restrictions has caused a shift in consumer behaviour which looks set to stay, with online shopping continuing to rise. As a consequence, consumers have also shifted their payment preferences to match their lifestyles. The research has shown that while many consumers own credit cards, they are increasingly getting stung by a lack of understanding of how they work, unexpected fees, and the danger of rolling over debt month to month. On the contrary, UK consumers using services like Klarna’s benefited from additional flexibility at no extra cost, saving £76m in credit card interest last year alone.”
Recently, IBS Intelligence reported that Klarna announced its new Comparison Shopping Service (CSS) in 21 markets. Klarna CSS offers FinTech’s partner retailers across Europe an increased customer reach and budget savings to boost their return on advertising spend and drive traffic from high shopping intent consumers. In addition, the Klarna comparison shopping page will provide new opportunities for brands to reach browsing consumers with their products.
IBSi Daily News Analysis
May 30, 2023
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