Sebastian Siemiatkowski, the co-founder and CEO of Klarna, recently discussed the growing popularity of buy now, pay later services and how Klarna is utilizing artificial intelligence (AI) in their hiring processes. Klarna, a Sweden-based company, is one of the largest providers of these services globally and entered the US market in 2015. The usage of buy now, pay later options has increased tenfold since the pandemic, and US regulators view it as a potentially more sustainable alternative to credit cards.

Siemiatkowski explained that Klarna decided to expand to the US due to the presence of a significant group of consumers known as "self-aware avoiders." These individuals had experienced negative encounters with credit cards and sought more flexible payment options. While they primarily used debit cards, they occasionally desired the option to use credit for specific purchases, making buy now, pay later an ideal solution.

When asked about how merchants are adapting to this payment option, Siemiatkowski emphasized that they now have access to a broader customer base through interest-free credit. This has led to higher order values and increased spending. While 20% of the spending volume for Klarna currently comes from their own app, the company allows merchants to maintain control over their websites, including the presentation and production of their products.

In terms of the overall health of the consumer, Siemiatkowski acknowledged that while buy now, pay later is growing in popularity, retailers are facing slightly more challenging conditions compared to the previous year. Sales during events like Black Friday were heavily driven by discounting, indicating a potentially tougher macroeconomic climate. Additionally, with US credit card debt exceeding $1 trillion, Siemiatkowski believes the country may be reaching the end of an economic cycle, posing challenges for consumers. However, he pointed out that unemployment rates have not risen significantly, which would exacerbate the situation further.

Regarding Klarna's hiring practices, Siemiatkowski revealed that the company implemented a hiring freeze in November. This decision was influenced by their utilization of AI, particularly OpenAI. As one of OpenAI's first corporate customers, Klarna uses AI across their entire organization, but Siemiatkowski emphasized the unpredictability of technology's impact. Therefore, they are encouraging different teams to use AI extensively and focus on areas where it has shown success. One example of Klarna's AI integration is the use of DeepL, a software that provides flawless translations in multiple languages. As Klarna operates in over 20 languages, this tool has greatly facilitated internal communications, allowing them to communicate primarily in English and rely on DeepL for external communications such as dispute management and customer service.

Overall, Klarna's buy now, pay later services have gained significant traction during the pandemic, attracting consumers who prefer flexible payment options over traditional credit cards. Merchants have also benefited from increased customer access and higher spending, although the economic climate presents challenges. Klarna's incorporation of AI, including DeepL, has improved their internal and external communications, streamlining processes and enhancing customer service.