German legislative proposal alarms Klarna

But there are more concerns. The legislative proposal implies that address data may no longer be used for credit reporting in the future. Klarna and other (post-)payment service providers in Germany heavily rely on address information. In mid-March, Klarna reportedly contacted Bitkom, the advocate for the information and telecommunications industry in Germany. The legislative proposal could “limit or even prohibit creditworthiness checks”, Finance Forward quotes from an email from the Swedish payment method.

Other payment service providers are also said to have approached Bitkom. The lobby association is expected to issue a statement soon.

According to the proposed law, companies in Germany will no longer be able to use address data to assess the risk of default. Access to consumers’ bank accounts does not provide an alternative. Klarna’s open banking service, used for a fee by online sellers who want to offer post-payment, also loses power.

According to skeptics, the new rules are not in the spirit of the law because they indirectly harm consumers. Online ‘buy now, pay later’ services, experiencing significant growth in Germany, would become more complicated than necessary. Moreover, fraud and money laundering could increase if companies are no longer allowed to use address and bank data for verification.

Klarna, serving over 100 million European users on its platform, hopes that the proposed legislative amendment will be revised before the final decision is made this summer, together with Bitkom.

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