THE SET-UP: Late-Stage Capitalism is characterized by a Borg-like relentlessness. If it can do it, it will do it. Whether or not something should be done—or “disrupted”—rarely enters the question. Even when it does, it doesn’t stop the Borg. It’s only true limit is its own imagination. It certainly isn’t limited by ethics or potentially unwelcomed consequences.
Enter Artificial Intelligence.
Today’s RUNDOWN featured a number of stories on the coming impact of A.I. and A.I.-driven robots on the workforce. Some of that was fueled by comments made last week by Anthropic CEO Dario Amodei. In separate interviews with CNN’s Anderson Cooper and Axios, he said we are unprepared for the rapidly approaching shock—a.k.a. “disruption”— A.I. will inflict on the job market. He told Cooper:
“AI is starting to get better than humans at almost all intellectual tasks, and we’re going to collectively, as a society, grapple with it. AI is going to get better at what everyone does, including what I do, including what other CEOs do.”
Amodei predicted up to a 20% spike in unemployment by 2030 and noted that Anthropic’s A.I. can already outwork the typical entry-level corporate worker. Because it is still learning, he told Axios, it is just going to get better and better and, therefore, it “could wipe out half of all entry-level white-collar jobs” by the end of this decade.
It’s really going to impact many college graduates who will find themselves competing with an applicant who doesn’t need days off or even a lunch break. In fact, it already has impacted them … again per Axios:
Unemployment among recent college grads is growing faster than among other groups and presents one early warning sign of AI's toll on the white-collar job market, according to a new study by Oxford Economics.
…and…
Looking at a three-month moving average, the jobless rate for those ages 22 to 27 with a bachelor's degree was close to 6% in April, compared with just above 4% for the overall workforce.
More to the point of today’s TRIFECTA, Axios also noted:
Klarna, the buy now, pay later company, set out in 2023 to be OpenAI's "favorite guinea pig" for testing how far a firm could go at using AI to replace human workers — but earlier this month it backed off a bit, hiring additional support workers because customers want the option of talking to a real person.
As you’ll see, the Buy Now, Pay Later (BNPL) business is growing by leaps and bounds, and Klarna is leading the way.
What’s striking is that BNPL is popular with Millennials who are struggling to make ends meet and with Gen Zers struggling with discretionary spending. They, along with Gen Alpha, are exactly the workers who Amodei sees competing with A.I. As it stands today, they are already turning to BNPL companies to pay for groceries and the rent … and the competition with A.I. has barely started.
But the Borg doesn’t care. It just keeps going. Right now, Klarna is benefitting from their inability to make ends meet in THIS job market … but look at this paragraph from the Benzinga piece EXCERPTED below:
Buy now, pay later provider Klarna took another step toward a U.S. listing last week, reporting progress on its transition into internally developed AI systems. AI-driven staff reductions of 700 contractors have generated "significant efficiency" according to the Swedish company, which now expects revenue per employee to reach $1 million, higher than the $575,000 reported last year.
Axios said they “backed-off a bit” from quite literally de-humanizing their workforce and look at the return they got on their A.I. investment … they almost doubled their “revenue per employee.”
Imagine how many CEOs are salivating … just waiting for the opportunity to tell Wall Street they reduced overhead AND doubled their “revenue per employee” in one fell swoop. At the same time, BNPL companies will be there to loan money to un- and underemployed college grads addled with student debt they cannot pay off because they couldn’t get a good, entry-level job at companies like Klarna. Perhaps the best part is that we are all collectively providing A.I. with the data and information it is using to teach itself what it needs to know to replace us. -jp
TITLE: The Buy-Now, Pay-Later Time Bomb
https://www.compactmag.com/article/the-buy-now-pay-later-time-bomb/
EXCERPTS: Imagine a 23-year-old recent college graduate working a gig job, managing multiple subscription services, and with only $50 left in her checking account. She might seem unlikely to splurge on a $550 ticket to Coachella, California’s annual pop-spectacle music festival. But the calculus might change if she’s offered a buy-now-pay-later plan to split the cost of the ticket into a series of deferred installments. Multiply this situation by hundreds of thousands and you have an idea of what happened last month, when over 60 percent of the nearly 200,000 Coachella attendees reportedly used a payment installment plan to afford the luxury of the experience—up from just 18 percent in 2009, when the festival first made these plans an option.
Buy-now-pay-later plans are short-term loans that allow consumers to split purchases up into installments over a set period. Once reserved for high-cost items such as refrigerators or engagement rings, these services are now increasingly being used to finance small purchases such as burritos or lipstick. According to a recent report, the number of US consumers using buy-now-pay-later plans rose from 49.2 million in 2021, to 86.5 million in 2024—a 76 percent increase in just four years. As these plans become more popular among less financially secure consumers, their risks increase.
For many young buyers, buy-now-pay-later plans have already become the first choice for financing even non-essential purchases. Brandon, a 27-year-old graduate student working in North Carolina, told me that he used them to make “clothing purchases on a limb” for things he didn’t need because of the convenience, adding, “what’s another $20 a month?” The appeal of deferring payments was echoed by Shayna, a 25-year-old physical therapist in Manhattan, who used a buy-now-pay-later plan to buy her boyfriend a gift she couldn’t afford. “It was something I needed to get now, but didn’t have all of the money for at the time,” she said. For consumers like these, payment installment services offer a feeling of financial freedom and instant gratification.
Younger people are especially likely to utilize these schemes. In a 2025 study of users of buy-now-pay-later plans, researchers found that millennials overwhelmingly use them the most. Almost half have used these plans compared to just 21 percent of consumers from other generations. With financial literacy also declining among millennials, this trend points to the normalization of debt among young adults.
Part of the appeal of buy-now-pay-later plans is how they stack up against traditional credit products. Paul, a 26-year-old Long-Island native working in Manhattan, recalled that “in college, I didn’t have a financial understanding about credit cards, I thought they would hurt my credit, so I didn’t have one. These plans were just easier to use and didn’t require you to know much about credit.” After using Affirm to buy a drone he couldn’t purchase outright, Paul recalled, “the item was now mine, even though I hadn’t fully paid it off.” Affirm even advertises itself as “an alternative to credit cards.”
Popular payment plan providers like Klarna and Afterpay gamify the user experience through rewards, notifications, and reminders, further incentivizing the use of these plans. These services promote a culture in which debt is not an exception but a lifestyle, and where financial carelessness is masked by the optics of affluence. For those already living paycheck to paycheck, these lending schemes are not just dangerous, they’re predatory.
Buy-now-pay-later plans remain widely unregulated. Many don’t require hard credit checks or income verification. Some perform soft credit checks, which do not appear on credit reports and examine limited credit information rather than performing a full financial evaluation—allowing individuals with poor financial standing to access these options freely with a few clicks on a screen. Recent research published by the Consumer Financial Protection Bureau found that over 60 percent of buy-now-pay-later borrowers held multiple active loans and nearly two-thirds of buy-now-pay-later loans went to borrowers “with subprime or deep subprime credit scores.”
TITLE: Consumers Are Financing Their Groceries. What Does It Say About the Economy?
https://www.nytimes.com/2025/06/02/business/buy-now-pay-later-groceries.html
EXCERPTS: Buy now, pay later financing, a cousin to once-popular layaway programs, gained momentum during the pandemic when online shopping surged. In 2019, consumers in the United States bought about $2 billion worth of goods and services using pay-later loans. By 2023, that amount ballooned to more than $116.3 billion, according to CapitalOne Shopping Research. But that is still a small fraction of the $1.18 trillion that consumers bought with credit cards in 2025, according to the latest consumer debt data from the Federal Reserve Bank of New York.
As companies like Klarna, Affirm and Afterpay quickly grow, the increased availability and ease of obtaining these loans could encourage young and low-income Americans to take on more debt than they should, some consumer groups warn. Companies that offer pay-later loans typically do not conduct hard credit checks, as traditional credit cards do.
Instead, the pay-later firms approve short-term financing, $500 for a television or $40 for a fast-food takeout order, based partly on a consumer’s stated income and payment history with the company. Typically consumers aren’t charged interest if they pay the installments on time. A majority of pay-later companies make most of their money by charging fees to retailers.
Many of the loans aren’t routinely reported to credit bureaus or captured in public data, a potential hidden source of risk to the financial system that is sometimes referred to as phantom debt.
[L]ower-income households — earning less than $50,000 a year — are also the biggest users of buy now, pay later programs, according to the annual survey of U.S. households released last month by the Federal Reserve.
And there are signs that borrowers are under strain with these loans. Nearly a quarter of all pay-later users made a late payment last year, up sharply from 2023, the survey reported.
The situation becomes even more precarious in periods of economic uncertainty. According to a report released by the Federal Reserve Bank of New York, household debt in America has reached an all-time high of $18.04 trillion as of Quarter Four of 2024—well surpassing the previous peak of $12.68 trillion in Quarter Three of 2008. As consumers’ ability to meet financial obligations shrinks, buy-now-pay-later plans, with their lack of consumer safeguards, become a ticking time bomb. Because these agreements are not regulated with the same rigor as traditional loans or credit cards, people often underestimate the risk, leading to missed payments, late fees, and damaged credit.
Many of these plans hide their predatory practices through late fees, high interest rates for loans requiring monthly financing, and lack of transparency. Klarna, for example, promotes zero interest if users pay in installments of four. However, when they sign up for smaller monthly payments on the platform, interest rates can range up to 35.99 percent. The company puts this information in small lettering, while advertising in larger letters that you can “spread the cost over six to 24 months with interest rates starting at zero percent.” Afterpay similarly advertises “interest-free” installments yet charges late fees up to 25 percent of the order value. Meanwhile, being late on a payment for Affirm results in no late fees, but negatively affects a user’s credit score.
One startling statistic indicates that these platforms tend to target consumers with lower credit scores. According to a study done by the Federal Reserve Bank of Boston, an individual’s credit score was the single most powerful predictor of whether an individual had used a buy-now-pay-later plan. The study found that “Consumers with FICO scores lower than 700 have a significantly greater probability of using buy now, pay later compared with consumers with higher credit scores.” Regardless of whether these consumers are being purposefully targeted, individuals with weak credit scores are the most likely to use the plans—risking further damage to their credit and overall finances.
We’ve seen similar patterns play out before. Installment-based credit systems used in the 1920s allowed middle-class families to finance high-priced purchases like appliances and furniture. When the stock market crashed, defaults skyrocketed, and unpaid credit obligations became one of the many contributors to the Great Depression. The lesson is that unchecked access to credit without appropriate regulation endangers not only individual consumers but the broader economy.
TITLE: Klarna's Downside: Buy Now, Pay Later Users Overspend And Miss Payments - PayPal Holdings
https://www.benzinga.com/personal-finance/management/25/06/45719177/klarnas-downside-buy-now-pay-later-users-overspend-and-miss-payments
EXCERPTS: Buy now, pay later payment processing services let retailers offer short-term installment loans at the time of purchase, allowing buyers to spread out payments. The loans are usually interest-free and without service charges, potentially encouraging customers to buy more than they can afford. Not surprisingly, these firms have come under investigation. Notably, the Swedish Financial Supervisory Authority hit Klarna with $46 million in fines in December after accusing it of money laundering in 2021 and 2022.
The company filed with the U.S. Securities and Exchange Commission for an IPO in March, citing an American domicile in Columbus Ohio. It postponed plans after President Donald Trump announced tariffs on Europe in April and hasn't responded to the latest rejection by U.S. Federal courts. Klarna reported a 13% revenue increase to $710 million in the first quarter of 2025 but still hasn't said when it will proceed with the offering.
The BNPL business model works by charging fees to merchants, like card processors. There may also be flat transaction fees and late fees for missed payments. The second issue could upend the industry after a recent Bankrate survey reported that about "half of buy now, pay later users have experienced issues like overspending and missing payments." While these companies depend on late fees, high incidence rates may attract the attention of regulators.
Almost one-third of Americans have used BNPL, according to the survey. Klarna captured 9% of the report’s market share while PayPal led the pack with 15%. Half of customers reported "issues related to service." Of those, 24% mentioned "overspending," 16% "missed payments" and 15% "regretting a purchase." Gen Z users reported the highest rate of these issues, across all generations. It also revealed "consistent use across all income levels," which is surprising, given the greater financial struggles of the lower classes.
The survey highlights a consumer base increasingly burdened by inflation and stubbornly high credit card rates. Bankrate Senior Industry Analyst Ted Rossman summed up the findings, noting that "BNPL can be a good deal if you use it responsibly. It provides access to credit and can help users smooth out their cash flow. But sometimes it can lead to overspending, and you would have been better off waiting until you could pay for the item up front."
It's hard to predict Klarna's success as a publicly traded company, given the moral hazards of this business model and financial challenges imposed by a potential trade war. However, things look brighter on the regulatory front because the Trump administration is pulling back on oversight, similar to its first term, scheduling budget reductions in consumer and banking regulations.
For now, it's best to just follow the money. Q1 2025 marked Klarna's fourth consecutive profitable quarter. It also reported an impressive 100 million active consumers while merchant growth surged 27%. Those are impressive numbers for this rapidly growing financial services startup.