The very first sentence of the article answers these exact two questions.

Can someone explain where the Y comes from? Is this something like, there exists a mother relation between this X and some Y?

Here’s the thing, though. There’s no interest charged to the customer. I think Klarna makes its money just because companies pay them money for integrations and for the ability to advertise that customers can buy now pay later and such. And at least in the case of my company’s integration with Klarna, Klarna takes all the risk. They’re lending customers money and hoping the customers pay it back. My employer gets the money up front and isn’t out any money if the customer doesn’t pay.

Your company pays a transaction fee just like with a credit card. Except it’s usually roughly twice as expensive as a credit card. This is what allows Klarna to take on all that risk, generally. For your company this is essentially a marketing expense. Offer a convenient way to pay in return for a few percent of the transaction (3-6% + a fixed fee, $0.30 perhaps).

Klarna generally partners with some financial firm to finance these short term loans, and they use the merchant fee to pay interest. These can be as high as 25% APR. It’s a high risk loan.

This is how they make money. It’s the only way they make money.

That is not correct. Klarna is functionally a payment processor, like an advanced type of credit card, and charges the merchant fees per transaction. For example, see here. They are highly cagey about specific fees until you actually sign up, and it depends on region and business size. But interchange fees are where the majority of their revenue comes from. To my knowledge, the fees are typically 3 percentage points above what the merchant would pay for a credit card transaction.

The reason merchants still accept Klarna despite the high fees is of course, improved conversion rates and decreased risk. Klarna assumes all the risk of the customer not paying, the shop gets all of the money instantly and doesn’t have to worry about it for the most part. That mainly makes it attractive for high margin shops that don’t mind spending lots on marketing to get a few extra sales (fashion, perfume, high end electronics).

I’m not too knowledgeable on how Klarna deals with late fees, but I’m pretty sure it differs per country they operate in. Many places have regulations limiting the abuse of late fees. I wouldn’t be surprised if the US is not that kind of place, and people who are late get fucked with fees.

In general, I agree with the second part of your comment and I do not recommend using any buy-now-pay-later kind of scheme, because you’re taking on additional risk for no real reason. Lots of stuff can happen even through no fault of your own (check engine light? Job downsizing?) that will affect your expected future income.

Nix has the same mix of conceptual simplicity and atrocious user interface as git, but somehow magnified three times over. I’ve tried it multiple times, but could never get over the unintuitive gaggle of commands.