The economic downturn has hit BNPL hard! Klarna will cut 10% of its global workforce

It is learned that on May 23, Klarna, Europe's largest BNPL payment giant, said it would lay off 10% of its approximately 7,000 employees worldwide. Its CEO listed the war in Ukraine, soaring inflation and a possible economic recession as the main reasons for the layoffs.

Last year, US consumers spent more than $20 billion through BNPL services, accounting for more than 2% of their total online shopping of $870 billion. Klarna's valuation increased from $11 billion in September 2020 to $46 billion in June last year.

Last week, the Wall Street Journal reported that Klarna is currently seeking to raise funds at a valuation of close to $30 billion, down 30% from its peak valuation. And Klarna is not the only BNPL company to be hit, with the share price of US BNPL giant Affirm falling nearly 75% this year.

In addition to the reasons cited by Klarna’s CEO, the deceleration in BNPL growth is also due to a slowdown in e-commerce transactions. According to the Mastercard SpendingPulse report released earlier this month, the number of e-commerce transactions was actually down 1.8% from a year ago.

On top of that, BNPL companies are dealing with another threat: regulation. A number of US and UK agencies have launched investigations into the companies’ potentially predatory lending practices, accusing them of irresponsibly saddling young consumers with debt.

Editor✎ Ashley/

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