Klarna recently reported its Q1 consumer credit losses surged 17% to $136 million|DD.com Images|CC BY 2.0

The buy now, pay later (BNPL) sector is seeing rising delinquencies, with Swedish fintech Klarna reporting that its Q1 consumer credit losses surged 17% to $136 million compared to last year.

The loss comes as Klarna delayed its IPO due to tariffs and economic uncertainty. The company, however, saw its customer base increase to 100 million. It replaced Affirm as Walmart’s BNPL partner and teamed up with DoorDash in March.

BNPL repayment issues are growing industrywide
In an April survey by LendingTree, 41% of users reported making late payments on their loans, up from 34% last year.

The survey also found that 25% of BNPL customers used it to buy groceries, compared to 14% a year ago. The borrowing reflects how households are grappling with the rising price of essentials.

Meanwhile, according to the latest Federal Reserve Bank of New York report, US consumer debt hit a record $18.2 trillion in the first quarter. Student loan delinquencies jumped 1% to nearly 8%, driven by Trump-era enforcement changes.

The Consumer Financial Protection Bureau (CFPB) under the Trump administration recently did away with a Biden administration rule classifying BNPL firms as credit card lenders, reducing required consumer protections.