Abstract

The background to the study is based on the increased use of Buy Now Pay Later (BNPL)services. Specifically in Sweden, which has the highest share of BNPL transactionsglobally, and in the fashion industry due to its high return rate. Klarna is a major BNPLprovider on the market. Klarna allows customers to postpone their payments to a latertime. However, for companies that collaborate with a BNPL service, merchant fees ofbetween 1.5% and 7% are incurred. Therefore, the study aimed to investigate howKlarna's BNPL service affects the profit margins of Swedish fashion companies. Theprofit margins examined are operating, gross, and profit margin. The method used isquantitative, where data on the fashion companies' profit margins were collected throughthe database Retriever Business. Data were also primarily collected from the companiesregarding their start date with Klarna. This way, profit margins could be compared beforeand after the collaboration was implemented, which was carried out through several ttests. The conclusion showed that operating and profit margins decreased statisticallysignificantly after the companies began collaborating with Klarna, which supportshypotheses 1 and 2. Gross profit margin showed no significant effect, which rejectshypothesis 3.