Would you use Klarna, the controversial app that allows users to buy-now-and-pay-later, at several online stores?

These days – thanks to the hundreds of thousands of apps available globally – you can have pretty much anything you want, when you want it. Fancy a McDonalds in your pyjamas? There’s Uber Eats for that. Want to watch a movie on a train? Netflix is at your service. Need to transfer money to a friend? Just do it on your phone.

Broadly, it’s a good thing. But as the digital world develops, its waters get murkier. A new app called Klarna is a case in point.

Founded in Stockholm in 2005, Klarna arrived in the UK in 2017. Its purported aim is to make shopping online easier.

They say: “In the last 12 years, technology has evolved, excited and transformed the world around us, yet our mission remains as relevant as ever, to make paying as simple, safe and, above all, smooth as possible.

“Klarna is now one of Europe’s largest banks and is providing payment solutions… across 100,000 merchants in 14 countries.”

Available at leading online retailers like Topshop, ASOS and JD Sports, Klarna allows you to buy what you want when you want it. You can choose to pay for your purchase 14 or 30 days (depending on the store) later; you can spread the cost of your purchase into equal monthly payments; or you can pay for it in three equal, interest-free instalments.

Sound tempting? A staggering 60 million customers, who make 800,000 transactions per day, think so.

But it has some glaringly obvious downsides. First, this app has the potential to encourage people to spend what they simply cannot afford. Second, users are subject to a “soft” credit check when they choose to split the cost of their purchases in three equal payments and to a “hard” credit check when they choose equal monthly instalments. Nobody with any financial nous wants to end up with a bad credit rating.

If you are sure that you have the cash to back up your purchase, Klarna may well be a convenient modern resource. Otherwise, it is worth remembering the old adage that good things come to those who wait.

January 2019