With over-indebtedness on the rise, driven by predatory blanco lenders who have created a SEK 250 billion blanco bubble, the government has now presented some much-needed proposals. These proposals are going to make a big difference for many consumers and are a very welcome action from the Government. As we take a closer look at these measures, we can’t help but think: “This sounds familiar”. And we are left wondering if the Government should in fact be going even further…

Some of the Government’s Proposals:

• Lowering the Interest Rate Cap: The proposal to reduce the interest rate cap from 40 to 20 percentage points is an important step to protect consumers from unsustainable debt. At Klarna, we’ve been advocating for this for years. But why not introduce a cap on the effective interest rate (APR) to prevent irresponsible lenders from using high fees (start fees, arrangement fees, monthly fees, invoice fees) to circumvent the interest rate cap?
• Cap on the Cost of Credit: The Government also proposes a cost cap to ensure consumers aren’t hit with excessive fees. It’s a good idea, but we believe unnecessary fees should be eliminated entirely. In a digital world, start-up fees of several hundred kronor are unnecessary—let’s just remove them. Moreover, relatively high fees can lead to a high APR and total cost of loan, which, despite the Government's proposal, can still reach several hundred percent.
• Limiting Credit Term Extensions: The Government wants to stop endless extensions that turn short-term loans into long-term debt traps. Great! We’ve already implemented clear and fixed repayment plans with defined end dates for the benefit of our consumers.

Sounds Like Something We Know

If these proposals sound familiar, it’s because Klarna has been living by these principles for years simply through the standard we have set for ourselves (hint: it is even better than the Government's proposal). We call it the Pink Standards, and it’s been our blueprint for putting consumers first since 2021:

• No More Revolving Credit: We scrapped revolving credit from our offerings because it’s a debt trap that doesn’t serve our customers’ best interests.
• Zero Unnecessary Fees: We eliminated the hidden fees that other lenders often rely on, ensuring our products are straightforward and fair.
• Friendly Reminders, Not Punishments: We doubled down on supportive, timely reminders to help our customers stay on track—no surprise fees, just a helping hand. We’ve also implemented autopay on due date as an option for all our payment options. 
• Transparent Pricing: We’ve led the way in making costs crystal clear, showing interest in absolute SEK terms so customers know exactly what they’re paying, and to make it even more transparent we are always stating the APR, which in Sweden we have capped at max 21.9%. 

These changes have made a real difference—our customers have saved more than 1 billion in fees, and late payments have dropped significantly. We didn’t wait for the government to step in; we took the lead because it’s the right thing to do.

Bottom Line: We're Ready—Is Everyone Else?

The Government’s proposals are a step in the right direction, but at Klarna, we’re already operating at this level. So while we applaud the Government’s efforts, we think they should in fact be going even further by:

• Implementing a cap on the APR; 
• Revisiting the introduction of a SKRI register; and 
• Focusing more on outcomes based regulation rather than prescriptive rules on marketing of credit. 

We’ve been setting the standard, and now it’s time for the rest of the industry to catch up. We’re eager to work with lawmakers and other stakeholders to ensure these new rules truly protect consumers and foster a fair, competitive market.