Swedish BNPL service (“buy now, pay later”) Klarna is cutting 10% of its staff. The dismissal of the company’s employees was announced through a pre-recorded video message, writes The Verge. The company currently employs about 7,000 people, so about 700 of them will lose their jobs.

As the company’s CEO explained, the reasons for the dismissal were “the unfolding of the war in Ukraine, changing consumer sentiment, sharp inflation, a very volatile stock market and a likely recession.” He stressed that European workers will receive compensation. But layoffs in the United States will “look different” depending on the region.

Despite layoffs and general market instability, Klarna’s CEO is still optimistic about the company’s future. We will remind, BNPL-services allow to buy a product for a small part of the price or in general free of charge and then to pay its full cost in parts within a certain period. Interest-free fees are charged for late payments.

The BNPL business took off in the midst of a pandemic, when people were limited in income and had no better occupation than online shopping. Until the end of last year, their use was still growing, but the unreliability of customers in such an economy is one of the reasons why companies suffer.

A recent study found that almost 73% of their users are young people born in 1993-2012. About 43% of them missed at least one payment, and almost 30% of users of BNPL services in general had problems with debt repayment. Businesses in this area cannot make money if they do not get their money back, so this makes it quite risky.