Finance

Topshop & Miss Selfridge: Now you don’t have to pay for stuff you buy online

By Oliver Smith 13 September 2016
Klarna’s UK managing director Luke Griffiths.
Summary

Klarna just fixed the most annoying part of shopping.

Online shopping has a problem, people are abandoning their impulse buys, even after they’ve added them to their baskets and headed to the checkout.

While that might be good for your bank balance, it’s not good for online retailers.

But today, that is going to start changing, because you don’t even have to pay anymore.

Topshop is just one of the retailers rolling out Klarna this week.

Meet Klarna

Across Europe Klarna has been going from strength to strength as over 65,000 retailers have embraced their simple idea, buy now, pay later.

Read more: People across Europe aren’t paying for stuff they buy online

It’s a great solution, you get the stuff you want today, and you’re given a 90-day interest-free window to pay up (after which Klarna starts charging 18.9% APR).

And it only takes a few second to order, you don’t need to enter all your card information until you’re actually ready to pay.

This morning Topshop, Topman, Miss Selfridge, Dorothy Perkins, Wallis, Burton and Evans, all part of the Arcadia Group of stores, became the first British retailers to start offering Klarna’s buy now, pay later service.

And it could be the next hot trend in British online retail.

Read more: Sweden is quietly becoming the home of Europe’s rising finance stars like Klarna

The next big retail boom

Brits are among the most sophisticated shoppers in the world.

We’re rapidly embraced online shopping, click and collect and omnichannel shopping (browsing and buying across retailer’s stores, mobile apps and websites).

Klarna think buy now, pay later is about to take Britain by storm, as shoppers look to push shopping bills back until their next paycheck comes.

“Klarna has had a dramatic impact on conversion rates abroad, we typically see at least a 10% jump in conversion rates for merchants. For consumers it’s just about giving them more choice and control over the way they are paying for products,” Klarna’s UK managing director Luke Griffiths told The Memo.

Warning signs

Obviously it should be noted that Klarna is credit. The business makes its money off of people who don’t pay back their shopping bills in time, as well as from retailers who pay it a fee for the service.

They’ll surely be a load of students who see this as a great way to spend even more money on clothes, which they might not actually be able to afford.

Hopefully most people won’t make that mistake, and will instead take full advantage of the interest-free spending without any of the downsides.

Today you can start trying out buy now, pay later on all of Arcadia Group’s websites and it’ll be rolling out on their mobile apps over the next few weeks.

Time to go shopping.