In Klarna’s interim report, chief executive and founder Sebastian Siemiatkowski said: “Credit cards drive economic inequalities. Those who can afford to pay off their balances each month reap rewards through loyalty schemes while those who can’t afford to simply get into more debt.”

He added: “The credit card model is simply unsustainable for consumers, in fact, it’s unsustainable credit.

“And consumers are waking up to this as they choose more sustainable forms of net credit that are transparent, fair and suit the way they live their lives today.

In response, money.co.uk senior editor James Andrews says: “There’s no doubt that problem debt can cause misery and worse to people trapped in a cycle of ever-bigger repayments.

“But what’s harder to see is how Klarna is the answer to that. People who can’t afford to repay aren’t exactly welcomed by the lender, and those that can repay on time see very little benefit for the loss of an awful lot of privileges."

Recent research from money.co.uk among 2000 consumers found that the average time UK shoppers say it will take them to clear their BNPL debts is now nine months, well in excess of of the 30-90 day windows most schemes are based on.

“Klarna proudly claims to save people £144 of credit card interest every 60 seconds - we’re just not sure on what," says Andrews. “That’s because purchases on credit cards don’t attract any interest at all for the first 56 days - almost identical to the 60 days interest-free Klarna offers on its popular Pay In Three option and far longer than its Pay in 30 Days product."

Responding to Andrews, Klarna says that its £144 claim takes the 56 day period into account, adding: "It is all very well to claim that people who pay their credit card bills off on time do not incur interest, but the reality paints a different picture: UK credit card holders currently have an *interest-bearing* outstanding balance of £29 billion on their credit cards and consumers spent £5.7bn in interest to credit card companies in 2020."

Elsewhere, Andrews says the only way Klarna is saving people money is if its customers are habitual late-payers - who see their accounts blocked until they clear the debt rather than interest charged.

He also claims that borrowing via Klarna can push customers into a debt spiral, due to the lack of visibility with credit agencies.

"Someone struggling with Klarna debts looks like they have a clean bill of health to anyone else thinking about lending them money, says Andrews. "“The other side of this is that a history of paying on time with Klarna also isn’t reflected in your credit score - whereas on a traditional credit card this would see your rating improve.

New persistent debt rules oblige credit card companies to explain to customers what will happen if they only pay the minimum and ultimately stop the card and move users onto a more sustainable plan if it looks like they’re taking too long to clear their credit.

“There’s no such rule in place for Klarna - which simply passes you on to debt collectors if you don’t pay up for long enough," says Andrews. “All this means the only advantage of Klarna over a traditional credit card is that you won’t ever be charged interest on its Pay In 30 and Pay in Three products. Although you can be passed on to debt collectors.

“In return for that, anyone paying on time is giving up any possibility of rewards or a better credit rating - as well as all the extra protection offered by Section 75 of the Consumer Credit Act - all in return for a maximum of an extra 4 days of interest-free credit.”

Klarna says that Money.co.uk is "hardly an unbiased commentator" because it generates revenue from credit card providers featured on its site.