Buy now, pay later. Products like Klarna’s became very popular during the Covid pandemic.

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Klarna plans to lay off about 10% of its global workforce by buying now and then paying the firm for the latest major technology company, which has announced job cuts.

Sebastian Siemiatkowski, CEO and co-founder of Klarna, made an announcement to his staff in a pre-recorded video message on Monday. He said “the vast majority” of Klarna employees will not be affected by these measures, however some “will be informed that we cannot offer you a role in the new organization”.

“If you work in Europe, you are offered to leave Klarna with appropriate compensation,” said Klarna’s boss. “Outside Europe, the process for affected employees will look different depending on where you work.”

Klarna will share with the staff additional information about the changes “very soon,” Siamiatkowski said. The Swedish payment giant has a staff of more than 6,500 people.

Buy now, pay later for products like Klarna’s – which allow shoppers to split the cost of purchases over a series of interest-free installments – became hugely popular as Covid accelerated online acceptance. But investors are increasingly worried about the sustainability of the sector as consumers prolong their struggles amid rising inflation and rising borrowing costs. Affirm, the largest provider of BNPL in the U.S., has lost nearly three-quarters of its value in the stock market since early 2022.

The move came after media reports last week that Klarna would lose a third of its market value in a new round of funding. The private company was last valued at $ 46 billion in investments led by SoftBank. A Klarna spokesman said the company was not commenting on market speculation.

Semyatkovsky said Klarna’s decision to cut staff was “difficult” but necessary for the company to remain “laser-focused on what will really make us successful in the future.”

“While it is important to remain calm in stormy weather, it is also important not to turn a blind eye to reality,” Semyatkovsky said. “What we see now in the world is not temporary or short-lived, and so we need to act.”

Many technology companies that thrived during the Covid pandemic are now taking steps to cut costs as investors abandon the sector due to concerns about rising interest rates and declining market liquidity. The parent company Facebook Meta and Uber are among the companies slowing down hiring, and Netflix and Robinhood have announced job cuts.

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