• Klarna will start drug testing employees in Sweden from January, Business Insider has learned.
• The buy-now, pay-later firm told staff about the new measures in an internal Slack post on Monday.
• Klarna, which is gearing up to IPO, said it was part of a wider effort to "strengthen security."

Klarna will start testing employees in Sweden for alcohol and drugs from January, Business Insider has learned, in a sign of the company increasing its internal security ahead of an anticipated IPO.

The buy-now, pay-later firm told employees via a company Slack channel post on Monday that an external supplier would carry out the random testing to ensure it was conducted in accordance with local laws and industry standards.

The post, from Klarna's director of people and HR, Mikaela Mijatovic, said the move was "part of a larger effort to strengthen security across Klarna."

The Slack message, seen by BI, said that Klarna plans to introduce similar drug testing in other countries where it operates, "following local laws and regulations." Mijatovic added that all new hires in Sweden will undergo testing during the recruitment process, starting in January.

Nafsika Karavida, an attorney at Reavis Page Jump in Sweden, told BI that employee drug testing is generally permitted under Swedish law within the private sector. She said it is "fairly common" in the fintech and banking industry and "getting more and more common."

The announcement comes after Sebastian Siemiatkowski, the CEO of Klarna, floated the idea of randomized drug testing to staff during a September all-hands. He said the company could need to introduce some additional safeguards because, as a growing financial institution, there had been greater interest in the startup from "less favorable parts of society: criminals, different hacking groups, and so forth," according to a recording of the meeting obtained by BI.

Some of the measures he discussed included monitoring employees' locations and drug testing staffers. Siemiatkowski added, "For more senior and more sensitive roles, this could also include things like understanding your financial statements to understand if someone is in trouble or could be potentially compromised."

In Monday's internal post, Mijatovic added that Klarna would also examine how it manages company devices and shares information externally.

The Swedish fintech, once Europe's most valuable startup, has been gearing up for an IPO in the US. It announced in November that it confidentially submitted draft registration documents to the Securities and Exchange Commission.

Klarna declined to comment.

Do you work for Klarna? Got a tip? Contact the reporter, Jyoti Mann, via the encrypted messaging app Signal at jyotimann.11 or via email at [email protected]. Reach out through a nonwork device.

• A growing share of US shoppers chose buy-now-pay-later options on Black Friday and Cyber Monday.
• Splitit's CEO told BI that his company's order volumes were up 62% in the week ending with Cyber Monday.
• Many buy-now-pay-later shoppers are likely to use the option again as they get used to the concept.

While Cyber Monday was the biggest e-commerce shopping day ever, the sales event (and the month leading up to it) marked a big test for the popularity of buy-now-pay-later (BNPL) services.

Nandan Sheth, CEO of BNPL firm Splitit, told Business Insider his company's order volumes were up 62% during Cyber Week (which ends on Cyber Monday) compared with last year, and that average order value was about $800, up from $650 last year.

Data from Affirm shows that BNPL represented just 2% of e-commerce sales in 2020, but has now topped 7%.

Klarna told BI it saw a 26% increase in orders from Black Friday to the following Sunday, while Afterpay said it saw a 10% increase from Friday through Monday.

Overall, Adobe said BNPL usage reached a record high on Cyber Monday, accounting for just shy of $1 billion, with three-quarters of those transactions occurring on a mobile device. Of the $131.5 billion in online spending tracked by the company during the month leading up to Cyber Monday, $9.4 billion was spent using a BNPL option.

There are a few reasons driving this growth, which looks poised to continue in the coming years.

It's no secret that many US household budgets are stretched after years of price inflation. Still, retailers report that their customers have proven willing to get creative in managing their spending to continue getting what they need (and want).

"We are seeing debt being used to fuel consumption, and that's not surprising, because a lot of households are constrained," Global Data retail analyst Neil Saunders told BI. "Within that debt mix, BNPL is one of the fastest growing segments, if not the fastest growing segment."

Of the many flavors of BNPL services, all offer a way to spread a cost over several payments for a low fee or no fee at all.

Under a traditional credit card agreement — which many BNPL users don't have — any unpaid balance after the initial period would start to rack up interest charges.

BNPL solves that installment math for shoppers and gets retailers to foot the borrowing costs. Retailers agree to this largely because BNPL encourages shoppers to spend more than they would without the option, boosting top-line sales.

For example, Splitit's CEO said one of his clients offered two smartphone models, with BNPL only available on the more expensive option.

"They had 45-50% skewed towards the expensive phone because the consumers were selecting the ability to split the payment," Sheth said.

More major retailers this year integrated BNPL options directly into their e-commerce checkout.

"Online retailers particularly have made it more accessible because it is such a conversion-driving feature for many of them," Omni Talk Retail's cofounder, Chris Walton, told BI.

Affirm has partnerships with a range of companies, including Amazon and Walmart, among many others. Meanwhile, Klarna has nearly doubled its number of US retail partners this year, including Rite Aid and Staples. The company also recently integrated with Apple Pay, with Google Pay coming soon.

Splitit similarly works as a point-of-sale option for a wide range of more specialized retailers, catering to shoppers who want to tap into their existing good credit.

"We saw really strong growth in the rate of orders being driven by mobile devices, and that was likely due to more and more consumers adopting mobile payments," Salesforce's director of consumer insights, Caila Schwartz, told BI.

As more retailers offer a more seamless checkout experience and BNPL services become more integrated in that process, more shoppers seem to be willing to give it a try.

What makes the mega-sales events like Black Friday and Cyber Monday so significant is that many shoppers are choosing BNPL for the first time this year, and if the past is any indication, they're highly likely to keep on using it.

Splitit's Sheth said more than a third of its users during Cyber Week had previously used the service at least one other time in the preceding year.

Affirm, which is more widely available, boasts a repeat customer rate of more than 90%, indicating that most of its users are able to successfully use the service and apply again. In addition, Affirm customers are using the service more, going from about three transactions a year in 2022 to more than five now.

Global Data's Saunders said that BNPL's "embryonic" status in the US means it will likely see outsized growth rates in the near term.

"I don't think that BNPL is replacing credit cards," he said. "It's certainly becoming a much bigger part of the mix, and for some people, they use it alongside credit cards."

There are also some shoppers who aren't able to make their payments and get in trouble. Some Gen Zers are already finding themselves buried under unmanageable piles of debt, largely from credit cards.

Regulatory agencies are now working on a range of disclosure and reporting rules to protect consumers and the larger lending ecosystem, but those face an uncertain future under a new Trump presidency.

For now, with shoppers willing to spend a little more if they can absorb the cost in smaller chunks, it appears the US economy is ripe for BNPL services to flourish as they have in countries like Australia and Sweden.

"As we see more Gen Zers get older and become more part of the consumer market, and they start buying more luxury and higher-priced goods," Salesforce's Schwartz said, "absolutely that could be an impetus for that [BNPL] payment method having a much larger share of the market."

If you are a BNPL shopper who wants to share your perspective, please contact Dominick via email or text/call/Signal at 646.768.4750. Responses will be kept confidential, and Business Insider strongly recommends using a personal email and a non-work device when reaching out.

• A financial guru has criticized strict budgets, advocating for intuitive spending instead.
• Budget culture is seen as restrictive, leading to potential "budget burnout."
• Experts suggest balancing intuitive spending with realistic budgeting for financial health.

Saving money and paying off debts can feel like an endless cycle, which is why financial gurus are so keen on budgeting.

But Dana Miranda, a certified personal finance educator, told CNBC Make It in a recent interview that strict spending plans can be "toxic."

Miranda, who is also the author of "You Don't Need a Budget," told the outlet that budget culture is based on "restriction, shame, and greed," and there's little concrete evidence it works in the long term.

Instead, she recommended "intuitive spending" and thinking about your money "moment by moment." Rather than punishing themselves for overspending, people should reward themselves when they save, Miranda said.

Not all financial pros are in agreement, though.

Katrin Kaurov, the CEO and cofounder of the social financial platform Frich, told Business Insider it's true that "everyone hates budgeting."

But she isn't convinced intuitive spending is a good alternative. For some, it can increase debt and result in purchases they don't need.

To budget or not to budget

Doug Carey, a chartered financial analyst and founder of the retirement and financial planning software WealthTrace, told BI that whether to budget is a question that comes up with many of his clients.

Generally, he said he disagrees that people must have a set budget and stick to it. As long as someone can max out their 401(k) contributions and save enough for emergencies, "they can use their intuition for spending."

For these people, it is pretty obvious when they are spending too much, Carey said, because they'll dip into savings.

Budgets can be too limiting for people who are more flexible in their income, such as freelancers or contractors, for example, because these systems don't often allow for easy changes.

Carey said the "micromanagement" of daily things can also "obscure the bigger picture of your financial health," such as long-term financial goals such as retirement savings or building wealth.

"This can create a negative association with managing money and lead to 'budget burnout,'" Carey said. "Many give up on budgeting when they feel like they cannot live within the strict limits of the budget."

Trial and error

Budgets can be more universally helpful if they make room for flexibility.

Kaurov told BI that budgeting isn't inherently toxic, "but many people create budgets with too much enthusiasm and optimism for how little money they will spend from month to month."

People spend more during the holidays, for example. So using December's budget in January probably won't work.

Kaurov said a budget should be about creating a realistic guideline for spending and saving. If you've set one you can't follow, you should rethink it, she said.

"Budgeting is a tricky — but important — skill for people to learn when they're starting to manage their money," she said. "Trial and error is crucial and will allow people to find what kind of budget works best for them."

The grass isn't always greener

Intuitive spending sounds like a good idea, but it may be a case of "the grass is always greener," Kaurov added.

"For so many, especially younger people who are often on a tighter budget anyway, it's a really poor financial habit to develop," she said.

For those who are partial to impulsively buying trendy items from social media ads, "intuitive spending" can quickly turn into overspending on things you don't need.

Julie Guntrip, the head of financial wellness at Jenius Bank, told BI that rather than following absolute rules about their spending, people give themselves grace when things don't go to plan.

"Budgeting practices many times fail because people can't stick to them — an individual makes one misstep and decides to give it all up," she said.

A better course of action may be somewhere in the middle.

"Factoring splurges into a budget could be a great compromise for someone who may feel like budgeting is too constraining," Guntrip added. "This practice may actually help someone stick with a budget longer."

• Thanksgiving online spending hit $6.1 billion, driven in part by mobile device purchases.
• More shoppers are using buy now, pay later, with $993 million in sales using the method expected Cyber Monday.
• About 80% of those purchases were made on a phone.

This year, more shoppers than ever are using buy now, pay later options that let buyers pay for purchases in installments — and more often than not from their cell phones.

According to new data from Adobe, buy now, pay later accounted for $6.9 billion in holiday spending from November 1 to November 28, with nearly 80% of purchases made on mobile devices.

On Black Friday, buy now, pay later is expected to rack up $711.3 million in sales by midnight — a 12.8% increase year over year. And come Cyber Monday, Adobe forecasts a record-breaking single day of buy now, pay later spending — $993 million.

Overall, shoppers are spending more than ever this Thanksgiving, with $6.1 billion spent online, according to Adobe. And roughly 60% of online consumers placed orders from their mobile devices.

"Cyber Week is off to a strong start, where bigger-than-expected discounts on Thanksgiving propelled impulse shopping in categories like electronics and apparel," Vivek Pandya, lead analyst at Adobe Digital Insights, said in a statement. "As people gathered with family and friends, many were hitting the buy button on their mobile devices, which hit an all-time high for the overall holiday season."

Buy now, pay later is available in many online stores via partnerships with companies like Affirm, Afterpay, and Klarna. They allow customers to pay a percentage of the total upfront and typically make interest-free payments over a set time.

A recent Harvard Business Review report found that buy now, pay later consumers spent an average of 10% more per purchase than they did without the option. And more often than not, those overspending were "financially constrained" credit-card-reliant consumers, according to the report.

BNPL has not been largely regulated, and the study warns that if consumers continue to spend more than they can afford on buy now, pay later purchases, they could accrue more debt.