Tom Hodgkinson on the slick “buy now, play later” services that make billions preying on the vulnerable and naive

Before the Reformation, the Christian church was highly disapproving of lending money and charging interest. It was a sin, it was called usury, and in charging interest on a loan, you were exploiting the misfortune of a fellow human being.

In his book on the subject, Your Money or Your Life (1988), the late historian Jacques Le Goff wrote that usury also leads to the sin of sloth, since it works while you are asleep. The medieval theologians argued that usury was against nature, since if you bury a gold coin in the ground, it does not grow more gold coins, as is the case with an apple. So someone, somewhere, is losing out, while someone else gets rich.

Usury was unjust, said Thomas Aquinas: “Making a charge for lending money is unjust in itself, for one party sells the other something non-existent, and this obviously sets up an inequity which is contrary to justice.”

There are many anti-usury passages in the Bible: “When one of your fellow-countrymen is recounted to poverty… do not exact interest from your countrymen either in money or in kind.” So saith Leviticus in the Old Testament, 24:35-37.

And in the New Testament we have Luke: “Love your enemy and do good; lend, without expecting to be repaid in full.”

This is not to say that usury did not happen. We know from Boccaccio and many other sources that unscrupulous money-lenders of the Wonga variety popped up all over town, keen to shove some much-needed cash at the poor in return for a hefty payment later down the line.

And at the other end of the scale, there were the great medieval banks, like the Medicis, which provided loans to the Pope and to kings for wars. They had the biggest houses and dressed in the finest ermine-trimmed cloaks. It was difficult for the church to condemn them, because they paid for the churches. They “gave back”.

I was reminded of the troubled history of usury when I read a great piece in the New York Times about the unstoppable rise of “buy now, pay later” (BNPL) services like Klarna. They seem to have taken usury to a new level. They make it fun!

Said the NYT: “‘Buy now, pay later’ has built a delirious new culture of consumption — and trapped users in a vortex of debt.”

BNPL schemes advertise themselves as providing “interest-free” financing. In reality, says the NYT, “the interest rate on longer-term plans can go as high as 36 percent; when payments fail to go through, late fees also pile up.” The BNPL outfits are exploiting the end user’s desire to live a life as glamorous as the people they follow on Instagram. So they provide a way to get those boots now! It’s usury, plain and simple.

The new usurers prey on the young, greedy and stupid. “A… 2025 paper from Britain’s Financial Conduct Authority discovered that BNPL users were ‘on average, younger, less credit-worthy’ and ‘have higher levels of unsecured debt.’ In other words, BNPL users tend to be both less financially educated and less financially stable — and thus a vulnerable population deserving of protection, not a group that should get five-figure credit lines tossed at them like Halloween candy.”

Klarna is huge: it makes the Medici family look like street hawkers. It claims 11 million customers in 26 countries. It went on to the stock market last month and is valued at $15 billion. Their mission statement reads: “Klarna helps people save time, money and reduce financial worry.” In fact, they do the opposite, to the great enrichment of the directors and shareholders.

Its CEO Sebastian Siemiatowski disguises himself as a nice guy in grey T-shirt and baggy jeans. But we know that he’s a modern-day usurer. He extracts profits from the poor. Please avoid his schemes at all costs. You don’t need those boots!

What are your views on money-lending and loans? Please send me your stories.

Subscribers may comment. Please add your idle thoughts using the box below.

SELECTED COMMENTS

These comments were mailed to us after an earlier version of this piece was sent out as a newsletter. We like to publish a selection and reserve the right to edit them for clarity. Please add your thoughts in the box below.

Sir: I am on awe to receive your newsletter with this theme at this precise moment when Klarna just sent me a bill that makes no sense. First of all, I apologize in advance for any typos and mistakes. English is not my language. I definitely didn’t used Klarna for a new pair of boots! I live a very simple frugal life in the Portuguese countryside. I studied Cinema, and have dealed in antiques since I was a child (used to travel with my dad to London to hit the flea markets! Wonderful times). I had a couple of misfortunes that turned my life around (although I see them as blessings now). Anyway, all this to say, as a freelancer (weddesign, brand creative direction, some vintage selling) I am no good for the typical bank. I have been living without a washing machine for two years, hitting the old water tank in the backyard. Sheets and jackets are hard. I couldn’t afford to buy one and no normal bank would give me credit. So I resorted to Klarna. If the government would offer small credits to its citizens, free of interest for a period of time, these big companies wouldn’t have me as a client. So there are some few of us using it by necessity. Anyway, for some reason they couldn’t charge me the value for this month, although the money is there, and it immediately added up 5euros, when the original bill was 77€. It’s crazy. I love your newsletters. All the best from a tiny, tiny village in Portugal named Roda.
Rita Teles

Sir: I can’t help but think Le Goff’s account of the medieval theologians’ logic is fatally flawed (either his account or their logic). Burying an apple will, in fact, grow you more apples. You don’t even need to bury the whole apple. Just a single seed. Each apple has the potential for untold feasts of tarts and cider. And, to be frank, I’m quite fond of the idea of getting to “earn” money (or at least apples) while I sleep. Perhaps Sebastian and his Klarna understands idling more than we give him credit for… Cheers,
Chris Collins

[Erm, I was trying to make the point that apples do produce more apples when buried in the ground, whereas gold coins do not. Maybe it was not clearly expressed. Ed.]

Sir: I was similarly aghast at the New York Times article on the Klarna addiction of young people! Excessive credit card debt and car loans used to be the route to an underclass existence in my generation, but it seems “after pay” or rather “never pay off” of Klarna type payment schemes has replaced it… On the question of whether taking on a loan is ever wise and worth it, I learned recently from a British scholar who was giving a talk locally, that in the 19th century the UK government took a loan from a large banking family to provide recompense to slavers for the loss of “property” when slavery ended there. Apparently that original loan from the 19th century is still being paid off. The United States, however, after the Civil War made no such compensation to plantation owners. Southern elites came to believe that their survival necessitated finding ways to pit poor whites against newly freed and ambitious blacks and immigrants. I think that we are in many ways still fighting the Civil War. I feel that Britain looks like an isle of tolerance compared with what we are experiencing here [in the US] now. Was the loan made for compensation therefore worth it?
Victoria Skelly

Sir: I’m ashamed of Sebastian because he’s Swedish like me! He should be clear and not pretend to be doing something “GOOD”. I see Klarna signs EVERYWHERE! Furthermore, we have bills with the bank NatWest and there is a scheme of points for the bills we pay through the bank and guess what : there are now over 50 shops that have joined the bank so bank customers can redeem the points (money) to any of those! I just put that money into our account every time – why should one not? Love your letters and that you pick up things that are now becoming mainstream. And trace them backwards in human history.
Gunilla Tyrland

Sir: That Le Goff book does sound interesting. Of course, the FIRE (Financial Independence Retire Early) movement bible is the Vicki Robin book of the same title (well worth checking out if you haven’t read it).
Andrew Kortz

Sir: I read your extremely interesting post on usury. I thought you might like to know that my publishing house, Os Justi Press, released a book-length study (indeed, a defense) of the scholastic teaching on usury: Something for Nothing?: An Explanation and Defence of the Scholastic Position on Usury. It can be found at amazon.co.uk here. Best regards,
Peter Kwasniewski

Sir: Dante also condemned the usurers very much.  In “Inferno” they are quite far down, in the Malebolge section, for those who used “frode” to deceive themselves and others, in other words using the mind not for reason but for a bad purpose. But yes, the usurers are definitely there.
Nicky David

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