this post was submitted on 28 Dec 2024
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The company I work for (in e-commerce) just recently started offering/advertising paying using Klarna.
If you don't know, (and you can probably guess given the context of this post), Klarna is a company that basically just allows users to buy now and pay over the course of a few weeks. "Buy this $100 item now and pay in four installments of $25 over four weeks" or some such. Anyone can get the app and it gives credit card numbers that will buy stuff online or whatever, and then the paying back process is that Klarna bills the customer over the course of a few weeks.
But companies can integrate with Klarna as well. When they do, Klarna makes everything work like it does with credit cards so the company doesn't have to completely retool to support Klarna as a payment method. And it's more convenient for the customer than dealing with the app and manually typing in the credit card number they get from the app.
Here's the thing, though. There's no interest charged to the customer. I think Klarna makes its money just because companies pay them money for integrations and for the ability to advertise that customers can buy now pay later and such. And at least in the case of my company's integration with Klarna, Klarna takes all the risk. They're lending customers money and hoping the customers pay it back. My employer gets the money up front and isn't out any money if the customer doesn't pay. And Klarna is huge. They're holding a whole lot of debt at any one time. And it's not secured debt or anything. And I don't think there are credit checks involved.
Really seems like a risky thing. Just like risky mortgages are. If a significant number of customers were to default on their debt at the same time (and not all Klarna purchases are $6 pizzas, some are multiple hundreds of dollars worth of debt), I'd imagine Klarna would be out of business quicker than Enron. Or maybe they'll be "too big to fail" by that point and they'll get a bailout.
Either way, it seems like a not-insignificant chunk of the economy is teetering atop the pencil-balanced-on-its-point that is Klarna. I'm not sure if there are a lot of other companies offering similar services, but if so, that just makes the economy seem that much more precarious.
Sounds to me like they’re waiting for people to get used to this model for every purchase before they quietly add interest.
ikr this is literally step 1 of enshittification.
Even knowing this and the grand plan, I feel like I get sucked in, too. It starts as "wanting to stick it to the man" by taking them up on whatever overly generous deal they feel like offering. "I know they'll get rid of it eventually, but there's no harm in abusing it while I can". But any "good" company won't just instantly quadruple their prices and sack all of their customer service staff on the spot. It'll always start off slowly. They'll offer promotions that are 5% less generous, they'll start to charge bag fees or service charges. They'll impose minimum transaction amounts. Etc.
By the time it becomes obvious, it usually too ingrained in your life, and the lives of many others to easily ditch. I saw this happen a lot with uber eats and Doordash. During COVID, they were paying people to stand at train stations and hand out flyers. They'd be offering like 50, 60, 70,.sometimes 80% off your order. Some of them were one time use only, but the lower value ones like 40% were usually reusable if you got a new code. Eventually by this point where you have to sign up for a monthly subscription to get any discount, it's already kinda ingrained in my life and once or twice a week when I "can't be arsed cooking" I end up just ordering something in and blowing 20 or 30 bucks on a meal rather than just keeping a pizza or some salad or other easy meals in the freezer
I could rant for a long time about the uberification of food delivery. Even places offering "in house" food delivery usually end up using on demand uber eats drivers anyway. Then they'll have the audacity to mark everything up 30%, charge a card surcharge, service fee, bag fees, priority delivery fee, on top of a delivery fee. Places that manage their own deliveries with hourly employees, not "iNdEpEnDeNt CoNtRaCtOrS" goes in my good books
Reminds me of something I heard back in 'zine times. "The trick is not to ignore the mainstream, but to selectively raid it for things we can use." -Mike Gunderloy. The resources are there, so go ahead and use them -- just do it on your own terms, consciously. I don't have Amazon Prime, but when my elderly relative needed a safety device and I could only find it on Amazon, you bet I got it from there.