Typically BNPL companies like Klarna take a cut from the merchant as well. The idea is to increase volume for the merchant through psychological trickery, resulting in a net increase in profit even after the BNPL company's cut.

I mean that's just how credit works right? Either you pay a certain amount of interest or there are late fees. Payday loans you typically pay back the sum + a large (10+%) amount of interest even when borrowing for as little as one week and paying back on time. Hugely more predatory. They're seeking out people who need cash and have no other option.