Skip to content

Podcast

The Buy Now Pay Later Takeover | Maxing Out | 2

Business Wars

Source ↗ ← All highlights
  • Influencer Deal Turns Into Moral Doubt
    • Ohosa Ovienrioba excitedly signs a brand deal to promote Klarna after sending approved videos to a marketing director.
    • Her friend warns her about users getting into financial trouble from buy-now, pay-later services, which deflates her enthusiasm. Transcript: David Brown It’s late 2020 in London, England. Influencer Ohosa Ovienrioba lets out a squeal as she hits send on an email. She’s just sent a batch of videos to a brand’s marketing director for approval. Once they sign off, she’ll post them to her Instagram stories and officially become a brand partner for one of the biggest companies she’s ever worked with. Ovienrioba started posting on YouTube back in 2010, mostly giving beauty and lifestyle tips. At first, the posts were a fun, creative outlet while she studied law at school, but now it’s her full-time job, and this latest deal is a major financial milestone. Ovi and Ryoba can’t sit still, so she picks up her phone and calls a friend. Speaker 2 Hey, how’s it going? Oh my gosh, you won’t believe who I’m partnering with. This is my biggest deal yet. Oh yeah? Who’s it with? Klarna. I’m doing Instagram stories about how I use it to buy my favorite beauty products. Hello? Are you there? Yeah, I’m still here. Did you hear me? I just signed a deal with her phone and calls a friend. Isn’t that cool? How much do you know about Klarna? Ah, I mean, I’ve used it here and there. It seems like a good service. It lets you divide payments up over time. Hmm, well, yeah. For some people, it’s great. But I’ve heard about a lot of people getting into real financial trouble. Not just with Klarna, but with other pay later services, too. Oh, I had no idea. Some people think the apps make it too easy to buy more than you can afford. I just read an article about people who are deep in debt because of these services. Can you send me that article? Yeah, yeah, yeah, yeah. Sending it now. I feel terrible. I don’t want to give bad financial advice. I’m sorry. I didn’t mean to rain on your parade. I am so proud of you. This deal didn’t come out of nowhere. Klarna wants to work with you because you’ve worked so hard to build your audience. Honestly, I’m glad you told me. It’s too late for me to get out of this deal, but I will never work with them again. Ovi (Time 0:00:09)
  • Klarna’s Origin And Big Ambition
    • Sebastian Siemiatkowski launched Klarna in 2003 to let shoppers get goods first and pay later, building early profitability in Sweden.
    • The model scaled globally, aiming to disrupt banking by making returns and deferred payment frictionless for e-commerce. Transcript: David Brown In 2003, a 21-year entrepreneur named Sebastian Chemiatkovsky had an idea. E-commerce was exploding, but consumer trust was still fragile. So he started Klarna, a company that would pay for purchases up front, then collect payment from consumers within 30 days. Consumers could receive an item, inspect it, and decide if they wanted to keep it before paying for it. The model worked. Klarna was immediately profitable in its home base of Sweden, and soon, Shemiotkovsky’s ambitions grew. He didn’t just want to make online shopping easier. He wanted to disrupt the entire banking system. In 2019, Klarna arrived in the United States. Then came 2020. The pandemic shut down brick-and stores, and online shopping took off. Klarna’s revenue increased 40 percent that year, passing $1 billion. But by 2021, clouds were forming. A shifting economic outlook and increased governmental scrutiny would soon put Klarna’s business model to the test. (Time 0:04:01)
  • Cheap Money Fueled Rapid Growth
    • Klarna soared during the pandemic as online shopping surged and low interest rates made borrowing cheap and profitable.
    • Rising inflation and higher interest rates later eroded that advantage, increasing borrowing costs and default risk for Klarna. Transcript: David Brown It’s March 2021, and as the United States passes the one-year mark of the pandemic, Klarna is booming. The company raises a billion dollars from new investors, including heavyweights like Silver Lake Partners and BlackRock. By June, Klarna’s valuation hits over $45 billion, tripling its worth in just nine months. It’s now the second most valuable fintech company in the world. Only payment processing company Stripe is worth more. There are rumors that Klarna will soon hold an IPO, joining its competitors Afterpay and Affirm as a publicly held company. But there’s trouble on the horizon. In February 2022, Russia invades Ukraine, causing energy and food prices to spike, especially in Europe, Klarna’s home turf. In the United States, inflation jumps to 9%, raising the prices of food and other consumer goods. This is bad news for Klarna. Consumers mostly use buy now, pay later pay for discretionary purchases like concert tickets, designer jackets, new TVs. In a downturn, these are the first things people stop buying. But that’s not the only problem. During the pandemic, governments slashed interest rates to historically low levels to encourage people to spend money. This was a boon to Klarna and other buy-now companies. Klarna relies on borrowed money from banks to front consumer purchases, and low interest rates made it possible for them to borrow lots of money and still turn a profit. But now, countries around the world are raising interest rates to combat inflation, which means Klarna’s costs are going up. Klarna took on losses to expand into the United States, and its path to becoming profitable again is getting harder and harder. (Time 0:05:18)
  • Mass Layoffs Signal A Turning Point
    • In spring 2022 Sebastian Siemiatkowski informs staff via prerecorded video that 10% of Klarna’s workforce will be laid off amid worsening conditions.
    • The move signals a painful retreat from pandemic expansion as valuation pressures mount. Transcript: David Brown In spring 2022, Klarna CEO Sebastian Shemiotkovsky sends a pre-recorded video to all Klarna staff. He tells them that 10% of the workforce, roughly 650 people, will be laid off. He encourages them to work from home and says they’ll receive a calendar invite to find out if they still have a job. Publicly, Shemi-Itkovsky spins the downsizing as a necessary move to shore up Klarna’s business model in an increasingly tough economy. But by summer 2022, Klarna’s valuation collapses, shrinking from $45 billion to just $6.5 billion, an 85% drop in value. Once again, Shemey Adkovsky feels like Klarna is teetering on a precipice. He’s felt this way before, when he tried to pivot the company to be a broader payment platform, and during the rocky U.S. Expansion. (Time 0:08:43)
  • Klarna’s AI Bet With OpenAI
    • Klarna experiments with AI after a 2022 deal with OpenAI, running 14 initiatives like chatbots and price comparison tools.
    • The company frames AI as a path to efficiency and product differentiation amid competitive pressure. Transcript: David Brown It’s November 2022 at Klarna’s offices in Stockholm, Sweden. Shemey Itkovsky walks down the hallway and knocks on the door of one of his top executives. He wants to go over the latest revenue report. Come in. Shemey Itkovsky enters and sees the executive grinning at the computer screen. Why are you grinning? I just asked ChatGPT to explain wormholes, design a workout regimen for me, and put together an itinerary for my trip to London next month. Looks like it’s nailed all of it. Shemmy Atkowski takes a seat. Is that good? Oh, yeah, it’s pretty amazing. Honestly, I think we all might be out of jobs in a few years. Well, we’ve known AI was coming. It’s just a matter of when. Now it looks like it’s arrived. I guess we either panic or we make it work for us. What do you mean? Well, I’m sure it could bring more efficiency to how we operate, don’t you think? And we can make AI work for our users, too, by integrating it into our customer service solutions. Shemi Atkovsky stands up, feeling excited about the opportunity at hand. You know, the more I think about it, I think we should do it. Working with open AI could keep us ahead of the competition. If you can’t beat them, join them, right? Exactly. Yeah, it’s an interesting idea. But it would mean collaborating with another company. Yeah, there’s that, but I think it’s worth trying. Shemi Atkovsky heads back to his office, excited about the possibility of making a deal and seeing what AI can do for Klarna. The first time in a while, he feels like he’s ahead of the moment rather than scrambling to keep up. In fall 2022, Klarna signs a deal with OpenAI, the maker of ChatGPT. Klarna will allow OpenAI to test out a variety of AI products on Klarna’s public-facing software, as well as its backend. By the summer of 2023, Klarna is experimenting with 14 different AI initiatives, including customer service chatbots and real-time price comparison tools for consumers. (Time 0:09:57)
  • Maxed-Out Shopper Faces $50K Shock
    • Fashion editor Alicia Berman discovers she’s maxed out multiple buy-now, pay-later apps and totals $50,000 in debt from clothes and accessories.
    • She plans to borrow from her 401(k) to repay obligations and vows never to use those apps again. Transcript: David Brown Fashion editor Alicia Berman sits at her kitchen table, staring off into space. A half-finished martini is in her hand. Her laptop is open, and a notepad filled with calculations sits beside it. Earlier this afternoon, Berman went into a department store and bought a designer coat on sale. She’s wanted a coat like this for a long time and was excited to score the deal. But when she went to pay for it, she discovered she had maxed out all of her buy now, pay later apps. Berman knew she used them a lot, but she was shocked to learn that she had hit the limit on all of them. Ever since she got back to the apartment, she’s been trying to figure out just how much money she owes. When she finally finishes her calculations, the answer is horrifying. And now, her husband has just returned home. She knows she has to tell him about the financial hole she’s gotten herself into, but she’s terrified about how he’ll react. The apartment door opens, her husband calls out. Hey, honey. Berman is so nervous, she feels like she can’t catch her breath. She tries to answer her husband, but she just can’t manage to find the words. Alicia? Her husband walks into the kitchen, does a double take when he sees her. Hey, hey, what’s wrong? You look like you’ve just seen a ghost. Honey, I need to talk to you. Her husband takes a seat, his eyes never leaving her. Okay. Berman opens her mouth a few times to say the words, but nothing comes out. Hey, honey, you’re scaring me. Berman knocks back the rest of her martini and says the words as fast as possible. Speaker 2 I’m, I’m $50,000 in debt. David Brown What? Wait, how? Speaker 2 I don’t know. I mean, I do know. It’s the clothes, the shoes, the handbags. I paid for them using a bunch of buy now, pay later apps, and I just didn’t realize how out of control it had gotten. The apps didn’t tell you? Days and at different times. Like on Monday at 8 a.m., Klarna takes a $250 payment from the account. And then at noon, a firm takes a $40 payment. The next day, Klarna takes another $200, and it’s not obvious how to view the full picture and find out the total amount each app is taking. David Brown Hey, that doesn’t seem right. Speaker 2 It’s not, but I have a plan. I’ve looked into it, and I can use my 401k to pay back what I owe. And then I can pay back my retirement funds with interest on a manageable schedule. Okay. I’m so sorry. David Brown Hey, hey, hey, it’s okay. It’s okay, there’s a reason for richer or for poorer is one of the vows, right? Come on, I’m here for you. Berman wipes tears from her cheeks. She can’t believe how compassionate he’s being. Speaker 2 I promise I am never going to use one of these apps again. (Time 0:13:37)
  • Regulators Close The BNPL Loophole
    • The CFPB reinterprets the Truth in Lending Act to cover buy-now, pay-later, demanding disclosures and consumer protections.
    • The agency finds many BNPL users already carry debt, so these services often add to existing credit burdens rather than replace cards. Transcript: David Brown In May 2024, the U.S. Government cracks down on the buy-now industry. For years, Klarna and its competitors have operated in a legal gray area. Their core product, short-term loans paid off in four installments or less, has fallen through a regulatory loophole. Because of that, they weren’t subject to the Truth in Lending Act. That law lays out strict rules that credit card companies have to follow. It requires clear disclosure about interest rates and fee schedules, and it gives consumers a formal process for resolving disputes. It’s meant to prevent exactly the kind of confusion that Alicia Berman experienced around not knowing exactly how much she owed. But that law hasn’t applied to buy-now companies until now. In May 2024, Rohit Chopra, the head of the Consumer Financial Protection Bureau, holds a press conference announcing a new interpretation of the Truth in Lending Act. He says that buy-now customers are entitled to the same protections as credit card users, including clear disclosures about payment structures, fees, and dispute resolution. Just because they don’t issue a rectangular piece of plastic to their customers doesn’t mean they’re exempt from following the law. He also says the Bureau will continue to monitor these services and take action if they feel it’s necessary. Chopra then points to research the Bureau conducted. It shows that most people who use Buy Now, Pay Later apps are already carrying debt. So these services are not necessarily replacing credit cards as promised, but instead are being used in addition to them. And because buy-now debt usually doesn’t show up on credit reports, lenders aren’t getting the full picture when they run credit checks. (Time 0:17:25)
  • Merchant Fees Drive Klarna’s Incentives
    • Klarna emphasizes merchant revenue over consumer welfare because it makes money from transaction fees paid by sellers.
    • That merchant-first incentive pushes the company to encourage more spending, creating tension with consumer protection goals. Transcript: David Brown In its announcement, the CFPB acknowledges that buy-now companies are now a major part of the United States credit market. Back in 2005, when Shem Iakovsky started his company, he vowed to disrupt the financial industry. And this is proof that he has. By June 2024, one study shows that 50% of Gen Z and 47% of millennials have used a BNPL service at least once. And in 2024, Klarna is profitable for the first time since 2019, bringing in $21 million in net profit. Then, in January 2025, Donald Trump is inaugurated for the second time, raising hopes that the regulatory pressure on Klarna and other buy-now services might ease. Trump campaigned in part on abolishing the Consumer Financial Protection Bureau. So in March 2025, Klarna makes a major move and files to go public on the New York Stock Exchange. With an IPO planned for April, CEO Sebastian Shemiakowski takes a number of steps to ensure it’s a success. First, he starts by going on a press blitz. Since 2022, tech investors have placed increased importance on profitability over growth, and Shamiatkovsky leans into this message, emphasizing that Klarna is keeping costs As low as possible, ensuring long-term profitability. His main talking point is that Klarna has reduced its workforce by 40 percent, in large part thanks to artificial intelligence. Now, in case you haven’t picked up on it, this is investor theater. Ahead of an IPO, companies don’t just present results, they present a story. To investors, Klarna isn’t selling growth anymore. It’s selling discipline. Cost-cutting becomes evidence of a company’s maturity, even when it’s reactive. But the danger here is believing your own pitch and mistaking market optics for fundamentals. In interviews, Shemi Itkovsky openly brags that the company is shrinking. In December 2022, Klarna employed over 5,000 people. Now it’s down to about 3,500. He says AI chatbots are doing the work of approximately 700 customer service reps. They’re currently handling roughly two-thirds of customer service calls. And he claims the customer satisfaction scores are roughly the same between bots and humans. Shemeyetkovsky tells interviewers he anticipates further gains from AI, saying 90% of Klarna’s staff uses AI in some capacity every day. (Time 0:19:55)
  • Big Retail Wins and Controversial Partnerships
    • Klarna lands an exclusive partnership to power Walmart’s BNPL, displacing Affirm and gaining scale ahead of its IPO.
    • The company then announces a DoorDash tie-up that draws ridicule for enabling installment payments for takeout. Transcript: David Brown Shortly after the company announces it’s filed for an IPO, Klarna announces a major coup. It will become the exclusive provider of buy-now loans for Walmart. Shemey Akofsky calls this win a game-changer. Not only is Walmart the biggest retailer in the United States, but in the process, Klarna has booted its biggest rival, Affirm, as Walmart’s partner. Affirm, for its part, tries to downplay the laws. They point out that Klarna will be underwriting the loans, but customers will be interacting with Walmartmart’s own buy now pay later service to shop they say it’s not an arrangement They would ever make furthermore they argue that losing walmart will have little effect on their bottom line as the retailer represents less than one percent of their income but a firm Stock price tumbles in response nonetheless and clarna isn’t done signing partnerships either. In March, they announce a deal with the delivery service DoorDash. A DoorDash executive highlights that this move is meant to help customers use DoorDash to buy high-ticket products like electronics. But DoorDash is mostly known for delivering takeout. And the response online is swift. But the insane thing we’re talking about today, the new partnership between DoorDash and Klarna, which means you can now go into debt for Crunchwrap Supremes, Chipotle burritos, And the Big Zach snack meal. Because when I heard about it, I thought it was an April Fool’s prank, but it’s real. Yeah, you’ll now be able to put your late night food run on a four payment installment plan. Speaker 2 I think this is a horrible idea. If you’re in dire enough streets that you need to split up your Taco Bell order, just order it in the first place. David Brown Yeah, I agree. On the surface, it’s a punchline. But while the internet laughs at the idea of financing a burrito, regulators, investors and competitors are watching closely. Just weeks before Klarna plans to launch an IPO. The timing, it couldn’t be worse. And suddenly, a joke about tacos starts to look like a serious problem. In Stockholm, Shemiotkovsky huddles with his top executives to discuss how to address the bad press. He paces his office as the executives sit nearby, laptops open. One executive rubs his hand through his wavy blonde hair. You know, we might be overthinking this. We’re the outrage du jour. Tomorrow, you know how it goes. The internet will be going on about something else. Shemiotkovsky shakes his head. You know, ordinarily I might agree with you, but with the IPO approaching, we can’t risk this backlash growing into a real problem. We got to address it. Another executive with thick glasses turns from the window to address the room. You know what? We got to start by stating the facts. These commentators keep talking about paying for a burrito in installments, but they didn’t even bother to look into the terms. You can’t pay in installments unless you’re spending $35 or more. Yeah, I know that’s true. We can point out that these so-called experts didn’t even bother checking the details, I guess. The blonde executive nods. Yeah, we can also talk about how many Americans pay for takeout or groceries on credit cards. How’s this any different? Shemmy Itkovsky points his finger at the executive enthusiastically. Yeah, you’re right. In fact, I’d say using Klarna’s better than putting recurring expenses on a credit card. Of course it is. They charge interest immediately. We only charge interest on longer-term loans or late fees. Shemi Itkovsky stops pacing and takes a seat. And this is just the kind of pushback you get when you’re a disruptor, right? We’re changing the way things have been done. People are reacting. He continues. I think we have a good set of talking points here. Let’s get this over to comms and have them write a response. The other executives gather their belongings and return to their offices. Klarna pushes through the bad press from the DoorDash partnership and defends the collaboration. (Time 0:22:54)
  • Tariffs Force Klarna To Postpone IPO
    • President Trump’s sudden tariff announcement in April 2025 creates market turbulence and forces Klarna to delay its planned IPO.
    • Tariiffs raise recession fears, undermining investor appetite for consumer-facing IPOs like Klarna’s. Transcript: David Brown It’s early April 2025 in Stockholm, Sweden. Karnas CEO Sebastian Chemiatkovsky sits at his computer watching CNN online. Earlier, President Donald Trump announced sweeping tariffs on almost all of the U.S.’s trading partners, including the European Union, India, and China. Although the president campaigned on instituting tariffs, what he’s announced here is much broader and steeper than analysts expected. Trump is calling the day the tariffs go into effect Liberation Day. But investors don’t seem to share this sentiment. Across the screen, CNN runs a chyron that reads, stocks tumble, dollar weakens as recession fears grip Wall Street. The anchor Wolf Blitzer echoes this in his analysis. And we begin with the breaking news from Wall Street. Trading has been underway now for just about 30 minutes, and nervous investors, very nervous investors, are weighing in on President Trump’s historic new global tariffs. Speaker 2 The early assessment, deep concerns. David Brown Shemeyatkovsky mutes the video. He knows the responsible thing to do is to delay Klarna’s IPO. It’s not in the company’s best interest to make a public debut in a turbulent stock market. And this exact scenario was flagged in Klarna’s prospectus to potential investors. It specifically listed tariffs as a risk factor. Higher tariffs generally lead to higher prices. And higher prices mean consumers cut back, which is bad news for Klarna. Despite partnering with Walmart and DoorDash, Klarna is still used mostly for larger indulgences. But even though Shemeyakovsky knew tariffs could derail his plans, it still stings. He’s approaching 20 years since founding the company. His main competitors, Affirm and Afterpay, have already gone public. He wants to join them, and he’s so close. But as red arrows flash across his screen and the major stock indexes plunge, the conclusion is unavoidable. The timing isn’t right. He’s waited this long and worked too hard to fumble this opportunity by rushing. Shemeyetkovsky picks up his phone to call his top executives. (Time 0:27:40)
  • AI Cost Cuts Hurt Customer Experience
    • Klarna’s heavy reliance on AI chatbots to cut costs backfires as customer satisfaction falls and unresolved issues mount.
    • The company reverses course and rehires human agents while still pursuing AI for customer financial tools. Transcript: David Brown For the past year, he’s been touting the potential of AI in the workforce. He’s speculated publicly that AI is capable of doing all human jobs, and he boasted about Klarna’s cost savings after chatbots started answering 75% of customer service calls. At the end of 2024, he even used an AI-generated avatar of himself to deliver the quarterly financial results. Then, in May 2025, Klarna makes a surprising announcement. It’s hiring humans as customer service agents once again. Even though chatbots saved money, Shemeyetkovsky now admits that customer satisfaction scores plummeted after the transition, a reversal from what he previously claimed. Social media is filled with people complaining that Klarna’s chatbots don’t actually resolve problems. They just root them to humans. And most people, it turns out, still want to talk to another person. Shemey Atkovsky says the company overprioritized cost savings and didn’t focus enough on customer satisfaction. So he’s bringing back humans. Not all about you, but for some of us who’ve suffered through useless, chatbot-driven customer service sessions, this day of reckoning hasn’t been nearly as widespread as it should Be, and likely will be. You know, the problem isn’t automation. The problem is automation almost always looks great on paper. Fewer employees, faster responses, lower expenses. And maybe that’d be fine if customers only wanted speed. But we all want something more, like a serious resolution to our issue, not a text link to a web page. A little human empathy would be nice too. For businesses, what’s the bottom line when it comes to technology and customer service? Remove friction for customers, but don’t replace that human relationship entirely. Nonetheless, plenty of businesses are still learning this by trial and error, even now. And I’m looking right at you, AI. Shemiatkovsky insists that Klarna is not walking back from using AI as a whole. In fact, they’re currently developing a financial digital assistant for customers. His hope is that eventually the AI assistant will negotiate loan terms and insurance rates for customers. (Time 0:30:05)
  • Product Shift From Lending To Banking
    • Klarna pivots toward banking products, launching a Visa debit card with installment options and premium tiers to broaden revenue.
    • The card drives rapid sign-ups and helps Klarna succeed with a modest IPO later in 2025. Transcript: David Brown He decides the key to a successful debut is to make sure people see Klarna as more than a pandemic-era one-hit wonder. He needs to go back to his original dream of Klarna not just as a lending company, but as a bank. On July 4th, 2025, Klarna launches a debit card in the U.S., accepted anywhere that Visa is accepted. The card allows users to either pay in full from their bank account or use it to make four interest-free payments. Qarna also announces plans to roll out premium tiers that offer rewards like airport lounge access and cash back, similar to high-end credit cards, for a monthly fee. The card is an instant hit, with approximately 13,000 Americans signing up each day for the first two months. And with that momentum behind it, Klarna finally goes public. On September 10, 2025, Shemi Itkovsky stands on the balcony overlooking the trading floor of the New York Stock Exchange. He’s wearing a Klarna pink jacket over a white T-shirt. The wall behind him is bubblegum pink, Klarna’s signature color, and it’s emblazoned with the company logo. And then he rings that famous bell. Trading is open. Last night, Klarna’s stock was priced at $40 a share. And now, he’s about to find out if the market will drive it up or if the IPO will flop. The first round of investors spikes the stock up 30 percent to $52 a share. And as Shemey Etkovsky makes the media rounds, he keeps returning to the same message. Speaker 2 In the U.S., there’s been a demand for an alternative to credit cards. People are tired of getting in debt, tired of the highest interest rates that they charge, and they want a better product. David Brown Klarna’s IPO is a success, though a moderate one. The company raises $1.37 billion on its first day of trading, and its stock price closes up 15%, giving Klarna a valuation of $14 billion. (Time 0:32:42)
  • Installments Make Debt Feel Harmless
    • Breaking payments into installments normalizes debt by making it feel like budgeting, even when consumers couldn’t otherwise afford purchases.
    • That psychological framing helps BNPL adoption but can create long-term financial harm masked by small, frequent payments. Transcript: David Brown Consumers no longer need to go through the process of applying for credit and running a credit check. With Buy Now, Pay Later, that whole process happens with just a click. It makes spending feel almost insignificant. And breaking down payments into four installments feels less like going into debt and more like budgeting. But it is debt. And now, over half of Buy Now, Pay Later users say they’ve used the service to pay for an item they otherwise couldn’t afford. Among Gen Z Buy Now, Pay Later consumers, this figure is 60%. That’s a sharp turn for a generation that grew up seeing their parents drown in credit card debt during the 2008 financial crisis and vowed never to repeat it. Oh boy, this may be Klarna’s most powerful innovation and its most corrosive when it comes to personal finance. Breaking payments into pieces turns debt into something that feels manageable and even responsible. Hey look, I’ve done this too, made the same rationalization, so don’t get me wrong, this isn’t a scold, but this is the same trick we’ve all seen before with subscription renewals or Minimum payments. Hey, how many streaming channels do you subscribe to? Are you sure? You watch them all? Or did you just want to see The Office or Seinfeld or The Big Game so badly that night you clicked the seven-day free trial, right? And by the way, those minimum payments, you know, you faithfully pay the minimum each month on time. You’re following the rules. And yet that debt never goes away. At some point, we all feel the pain. It’s not a question of if, but when. But there’s an underlying issue here. Who should pay for that pain? The user or the enabler? Now look, however you come down, there’s no getting around this much. Reasonable people can and do disagree. I mean, on the one hand, the borrower signed up for it. Case closed, right? On the other hand, consider the marketing, the use of big data, analytics, automation, the science of knowing exactly who’s most likely to say yes, and whether anyone truly reads the Fine print. Because the alternative is, well, it’s like walking away from something that feels too good to pass up. And that’s the power of buy now, pay later. (Time 0:35:00)
  • BNPL Becomes A Mainstream Payment Option
    • Despite legal and PR challenges, BNPL use spikes: Black Friday purchases via these apps top $1 billion in a day.
    • The services remain deeply embedded in U.S. payments even as regulators and plaintiffs press scrutiny. Transcript: David Brown Regulation continues to move slowly. In May 2025, the Consumer Financial Protection Bureau, now staffed with appointees made by President Trump, announced they would no longer enforce the Truth in Lending Act rules On buy now, pay later apps. This is a reversal from the Biden era approach. But that same month, New York passes a law requiring buy-now companies to obtain a state license, cap fees, and provide disclosures. And attorneys general in several other states, including North Carolina and Connecticut, begin investigating whether buy-now companies have violated any of their consumer protection Laws. Over the months following Klarna’s stock market debut, its share price drops down to $30 a share, well below its IPO price. Then, in December 2025, a class-action lawsuit is brought against Klarna by investors who claim the company failed to disclose that many of its customers were experiencing financial Hardship and that missed payments translate directly into losses that Klarna has to absorb, cutting into its profits. The plaintiffs argue that by downplaying these risks, Klarna overstated its financial health. Still, demand for Klarna and its new kind of debt shows no sign of stopping. On Black Friday, consumers made over $1 billion worth of purchases using Buy Now, Pay Later apps. It’s the first time these apps have crossed that threshold in a single day. It’s more evidence that Buy Now, Pay Later is firmly ingrained in the American payment ecosystem. (Time 0:37:25)
  • Practical Steps To Tackle Debt
    • Confront debt without shame and negotiate with creditors to create a realistic repayment plan.
    • Build side income and use strategic financial choices rather than extreme frugality to escape debt. Transcript: David Brown A big part of what we’ve been talking about today is how easy it is to get trapped in cycles of debt, whether it’s buy now, pay later or paying off your student loans. Rachel Rogers knows this firsthand. When she graduated from law school, she owed close to $360,000 and felt like her future was over before it began. But seven years later, she was a millionaire. In the Audible original, Your Debt Plan, Rogers shares her framework. Confront your debt without shame. Negotiate with creditors. Build side hustles to increase income. And learn how wealthy people actually use debt as a tool instead of a trap. Her message? You don’t have to live your cheapest life to get out of debt. You need to live your most strategic one. Make sure to check out Rachel Rogers’ new Audible original, Your Debt Plan, Reclaim Your Life and Get Paid. (Time 0:39:18)