In a message to Klarna’s shareholders, Sebastian Siemiatkowski accused the credit card industry of driving economic inequalities.

He said: Those who can afford to pay off their balances each month reap rewards through loyalty schemes while those who can’t afford to simply get into more debt. The lowest income households pay $21 in fees and interest while the highest income households reap $750 in rewards.

“The credit card model is simply unsustainable for consumers, in fact, it’s unsustainable credit. And consumers are waking up to this as they choose more sustainable forms of net credit that are transparent, fair and suit the way they live their lives today.”

It’s not the first time Klarna has opened fire on the credit card industry. In June, when Klarna launched ‘Pay in 3’, Siemiatkowski claimed the move marked the end of the need to use credit cards when shopping online.

But experts say that Siemiatkowski misses the point about how credit cards work in practice, and the benefits they offer.

James Andrews, senior editor at Money.co.uk, said: “There’s no doubt that problem debt can cause misery and worse to people trapped in a cycle of ever-bigger repayments.

“But what’s harder to see is how Klarna is the answer to that. People who can’t afford to repay aren’t exactly welcomed by the lender, and those that can repay on time see very little benefit for the loss of an awful lot of privileges.

“Klarna proudly claims to save people £144 of credit card interest every 60 seconds – we’re just not sure on what. That’s because purchases on credit cards don’t attract any interest at all for the first 56 days – almost identical to the 60 days interest-free Klarna offers on its popular Pay In Three option and far longer than its Pay in 30 Days product.

“So the only way it’s saving people money is if its customers are habitual late-payers –  who see their accounts blocked until they clear the debt rather than interest charged.”

Klarna’s advertising has been accused of encouraging unnecessary spending with slogans such as ‘Shop Like a Queen’, while its marketing to retailers claims that shoppers spend more when signed up to Klarna.

The BNPL lender had four influencer adverts banned by the Advertising Standards Authority (ASA) in December 2020 because they encouraged non-essential spending during the pandemic.

Andrews added: “And if we’re talking about sustainability and transparency, we have to talk about credit reports. Borrowing money on a credit card goes on your credit report. That means if things start getting on top of you, other lenders can instantly see how you’re faring before offering you new lines of credit to get into even more debt.

“That includes missed payments, your total available credit and how much of that total you’re using. But they can’t see any information about Klarna debts because the shopping firm simply doesn’t share it with credit ratings agencies. That means someone struggling with Klarna debts looks like they have a clean bill of health to anyone else thinking about lending them money.”

New persistent debt rules also mean credit card companies are also forced to talk to you, explain what will happen if you only pay the minimum and ultimately stop your card and move you onto a more sustainable plan if it looks like you’re taking too long to clear your credit.

There’s no such rule in place for Klarna – it will pass your debt to debt collectors if you don’t pay up for long enough.

“All this means the only advantage of Klarna over a traditional credit card is that you won’t ever be charged interest on its Pay In 30 and Pay in Three products. Although you can be passed on to debt collectors,” said Andrews.

“In return for that, anyone paying on time is giving up any possibility of rewards or a better credit rating – as well as all the extra protection offered by  Section 75 of the Consumer Credit Act – all in return for a maximum of an extra four days of interest-free credit.”