Klarna

In two thousand and five, three Swedish students identified a problem: sixty to seventy percent of online shoppers abandoned their carts at checkout. The issue was friction. You had to enter payment details. You had to commit your money immediately. The solution seemed obvious in retrospect: delay payment. Klarna split purchases into four interest-free payments. A hundred dollar purchase became four payments of twenty-five dollars. The customer got their item immediately. The merchant got paid in full. Klarna absorbed the credit risk. Their default rate stayed under two percent. The math worked. Klarna charged five point nine nine percent plus thirty cents per transaction. Credit cards charged roughly two to three percent. Merchants paid more for Klarna.