German legislative proposal alarms Klarna

German legislative proposal alarms Klarna

The federal German government intends to amend data protection law. The legislative proposal includes tightening creditworthiness checks, which could have a negative impact on Klarna and other payment service providers. They fear they may no longer be able to conduct automatic credit checks.

In early February, the German government agreed to amend the Bundesdatenschutzgesetz to strengthen consumer rights. When the Süddeutsche Zeitung reported that the law could empower credit bureau Schufa, several payment service providers reportedly panicked.

Address data unusable for credit reporting

But there are more concerns. The legislative proposal implies that address data may no longer be used for credit reporting in the future. Klarna and other (post-)payment service providers in Germany heavily rely on address information. In mid-March, Klarna reportedly contacted Bitkom, the advocate for the information and telecommunications industry in Germany. The legislative proposal could “limit or even prohibit creditworthiness checks”, Finance Forward quotes from an email from the Swedish payment method.

‘Credit checks are at stake’

Other payment service providers are also said to have approached Bitkom. The lobby association is expected to issue a statement soon.

Open banking loses power

According to the proposed law, companies in Germany will no longer be able to use address data to assess the risk of default. Access to consumers’ bank accounts does not provide an alternative. Klarna’s open banking service, used for a fee by online sellers who want to offer post-payment, also loses power.

The spirit of the law

According to skeptics, the new rules are not in the spirit of the law because they indirectly harm consumers. Online ‘buy now, pay later’ services, experiencing significant growth in Germany, would become more complicated than necessary. Moreover, fraud and money laundering could increase if companies are no longer allowed to use address and bank data for verification.

Final decision

Klarna, serving over 100 million European users on its platform, hopes that the proposed legislative amendment will be revised before the final decision is made this summer, together with Bitkom.



Arjan van Oosterhout has been contributing to Ecommerce News Europe since the spring of 2023. He writes news articles for the website on a freelance basis.

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