Meanwhile, Sweden’s Klarna raised money in June at a nearly $46 billion valuation. Affirm, a San Francisco company that went public earlier this year, is now valued at nearly $15 billion (and its stock is up 8% in premarket trading).

How it works: These companies partner with retailers like Target (TGT), H&M, Sephora, Macy’s (M) and ASOS (ASOMY) online or in stores to offer customers the option at checkout to pay in installments. That lets shoppers snap up a $200 handbag for the cost of just $50 initially without having to undergo a credit check. The remainder is paid off in chunks over the coming months, often without interest.

A firm like Afterpay covers the entire cost right away for the retailer, less fees.

So-called “point of sale” lending has existed for decades. But the service has boomed alongside the spike in online shopping during the pandemic, which also ushered in significant financial instability for many…

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