There is a number that every BNPL provider will tell you when they are trying to get you to enable their service: conversion rate uplift. The merchant who started this Reddit thread can confirm that number. Their store saw a 30% increase in conversions after enabling Klarna.
They also lost two Shopify Payments accounts.
“Never activate Klarna on Shopify payments,” the original poster wrote, with the calm of someone who has already done the math and does not like the answer. “It lures in the lowest quality customers you can get. They are all rude, cheap, and a pain in the ass. Never had to deal with such entitled crybabies, apart from the disgusting amount of chargebacks and disputes. I learned my lesson the hard way.”
The thread collected dozens of responses from merchants who recognized the experience immediately and had their own versions of the same story.
The Fraud That Only Came Through Klarna
The original poster’s specific examples illustrate how the fraud mechanics work in practice. Customers ordered multiple products, then sent back fake return paperwork while keeping the goods. One customer sent back a $5 watch from Amazon in place of the original product. The fraud, the poster noted, happened exclusively through Klarna. Not through other payment methods. Only through BNPL.
Another merchant described a chargeback timing problem that is particularly damaging for smaller sellers. A customer requests a return. The merchant provides return instructions. Before the item has even been shipped back, Klarna has already filed the chargeback. “We’d have a chargeback on that order the next day before the item had even been sent back to us,” they wrote. “If you have it enabled, DISABLE it ASAP.”
The mechanism here is structural rather than accidental. Klarna’s consumer app gives buyers a button to indicate they have initiated a return. Once that button is pressed, Klarna’s dispute process begins, regardless of whether the merchant has received anything back. From the consumer’s perspective, this is a feature. From the merchant’s perspective, it means losing a chargeback dispute over a return that has not happened yet.
The Shopify Payments Trap
The most serious consequence in the thread is not the individual fraudulent orders. It is what happens when chargebacks accumulate at a high enough rate. Shopify Payments, like most payment processors, has a chargeback rate threshold. Merchants who exceed it face account suspension or termination. The original poster lost not one but two Shopify Payments accounts, meaning losing the ability to accept standard card payments through Shopify’s integrated system entirely.
This is the part of the BNPL conversion story that the providers do not put in their merchant marketing materials. Yes, enabling Klarna may increase your conversion rate. It may also generate enough chargebacks to cost you your primary payment processor. The 30% conversion uplift and the two lost accounts are not separate outcomes. For this merchant, they are the same story told from two different angles.
It Depends on What You Sell
Not every merchant in the thread reported disaster. A wagyu beef seller said they turned Klarna off after one week and three complaints, not catastrophically, but enough to make it not worth it. Their typical customer spends around $315 per order. Klarna was bringing in customers spending under $150. “Not what we’d want anyway,” they noted.
A merchant selling higher-priced products that customers actively search out rather than buy on impulse said they have had no problems with Klarna at all. Another who has used it since 2019 reported small issues but generally manageable chargebacks.
The pattern that emerges from the thread is not that Klarna is uniformly bad for all merchants. It is that Klarna performs very differently depending on average order value, product category, and whether the purchase is considered or impulsive. One commenter put it bluntly: “Wait, you mean to tell me the people who opt to finance a $35 T-shirt are bad customers?” The answer, at least in this thread, appears to be: disproportionately, yes.
The Stolen Card Problem Nobody Talks About
One commenter raised a dimension of the BNPL fraud problem that goes beyond angry customers and opportunistic returns.
A significant portion of BNPL fraud involves stolen credit cards or stolen identities, where the recurring monthly charge structure makes the fraud particularly difficult to unwind. Cancel your card after a fraudulent BNPL purchase and the account often auto-updates with your new card details. There is no straightforward way for a victim to block a specific merchant or payment processor once the recurring billing cycle has started.
The commenter argued that the only structural solution is merchants collectively refusing BNPL services, making them a less attractive fraud vector by reducing the number of places they can be used. The services themselves, they noted, have no financial incentive to aggressively pursue fraud reduction: better fraud detection means fewer approved transactions, and fewer approved transactions means worse metrics for the investors funding the BNPL companies’ growth.
Our Take
The 30% Lift Is Real. So Is the Trap.
The Klarna merchant complaint thread is not evidence that buy now pay later is a bad product. It is evidence that BNPL works very differently depending on who your customer is and what they are buying, and that the conversion rate uplift BNPL providers advertise is a real but incomplete number.
What it does not include is the chargeback rate, the fraud rate, the customer service cost, the dispute resolution time, or the risk of losing your primary payment processor if the chargeback rate gets high enough. For merchants selling considered, high-value products to customers who actively sought them out, BNPL can be a genuine conversion tool.
For merchants selling lower-priced impulse goods to a broad audience, enabling Klarna appears to be a reliable way to attract exactly the customers most likely to abuse the return process, dispute the charge, and move on. The 30% conversion lift is the number Klarna will show you. The lost Shopify Payments accounts are the number they will not.
