Banco Santander launches into “buy now, pay later”: following in the footsteps of Klarna and its successful model

Banco Santander has just launched Zinia, a consumer digital credit platform very similar to Klarna with which it wants to replicate the enormous success of the Swedish startup, which in 15 years of life has reached a value of around 46,000 million dollars, which places it above other business successes in the technology sector in Europe such as Spotify or Stripe.

‘Buy now, pay later’. Klarna’s business model is nothing more than a technological twist on traditional credit cards. The Swedes are associated with some 250,000 electronic businesses from 17 different countries, which offer different forms of payment on their websites, such as their own cards or Paypal, and also Klarna. If the user selects the latter, the website redirects him to the page or application of the Nordic startup and, if he is registered, gives him the option to pay for his purchase in up to three interest-free installments. You can also buy the item right away and postpone your payment for 30 days.

Didn’t credit cards already do this? Yes and no. Indeed, credit cards already allowed buying in installments, but with a significant handicap: interest and fees had to be paid. The Klarna model is completely free for the buyer, since its premise is that the user will pay the same amount, only that it gives them the option of dividing it into up to three monthly installments.

To do this, what it does is charge e-commerce a percentage of the sale, approximately 3%, as any payment gateway does. Klarna pays the full amount to the business at the time of the transaction from its own funds, which it then recoups in installments as the buyer pays the installments.

Success among the younger generations. This reinvention of consumer credit has the virtues that it is free for the user and, furthermore, it adapts perfectly to current digital purchasing dynamics, especially for the youngest: simple payment (if you have previously registered with Klarna) and in a few steps. Thanks to them, it has achieved approximately 90 million users in just over 15 years, most of them in Europe.

Zinia. With its new platform, Banco Santander is going to replicate the Klarna model with its own application. As they explain in a press release, they already have 63,000 adhered businesses for this. They do not report, however, how many interest-free installments they will offer their users.

Although Banco Santander has announced that the platform has just been launched, they also point out that they have been testing the technology it uses in recent months in Germany, during which time they have added about two million users. Now they are going to launch it in the Netherlands and, from there, it will be extended to the rest of the countries in which the entity operates. In Spain it will start operating throughout 2022.

The danger of debt. The figures from Klarna and the commitment from Banco Santander are quite eloquent: the model generates huge profits and works very well. So much so that it entails risks of indebtedness, especially among its main users, the younger generations. Registering on the platform is very simple, and you only need a debit card to do so. Once you have an account, the user can finance thousands of products in a few steps, and the same thing happens in Zinia.

Magnet’s companions picked up the testimony of several young users of Klarna, who told them that the process is so simple and attractive that they buy without as many qualms as before and that, when time passes, “you do not realize how much you have spent and half of your salary goes to Klarna refunds.”

The authorities have already warned of the danger. In the UK, the Financial Conduct Authority warned A year ago the market for this type of financial services, led by Klarna, had multiplied by three throughout 2020, and that its presence in more and more online businesses could encourage reckless borrowing.

Klarna defends herself. The Swedes, however, responded to that warning from the British financial authority by pointing out that, unlike credit cards, they constantly reassess the financial capacity of their customers to prevent someone who cannot pay from getting into debt.

“When you apply for a credit card, you immediately have a large amount of money available that you can spend on whatever you want, even if your financial circumstances change. This is much more dangerous for consumers than Klarna, where we check your affordability on each and every purchase, provide you with a payment plan to keep you out of debt, and restrict your use of our services if you miss a payment,” Klarna explained. at that time.