Klarna launches ‘pay now’ function
The firm said UK consumers will be able to pay immediately and in full to give customers “more choice, clarity and control over how they pay”.
Klarna said it would also be strengthening affordability checks and making checkout language clearer, so customers understand that they are taking out a credit product, with consequences for missed payments.
Sebastian Siemiatkowski, chief executive of Klarna, said: “We firmly believe that most of the time, people should pay with the money they have, but there are certain times where credit makes sense.
“In those cases, our BNPL products offer a sustainable and no cost healthy form of credit – and a much needed alternative to high cost credit cards. The changes we are announcing today mean that consumers are fully in control of their payments whether they pay now or pay later.”
Buy now, pay later lenders such as Klarna give shoppers the option of delaying or splitting payments with no fees or interest.
Critics say such schemes encourage people to spend more than they can afford, with Citizens Advice saying they can be a “slippery slope into debt”.
Last month, Citizens Advice found one in 10 buy now, pay later shoppers have been chased by debt collectors, rising to one in eight young people.
The government announced plans earlier this year for buy now, pay later products to be regulated by the Financial Conduct Authority.
Myron Jobson, personal finance campaigner at Interactive Investor, said: “BNPL services have become like a drug for many consumers, particularly young adults, used to buy coveted clothing and must-have gadgets owned by their idols without having the cash in the bank to fund these purchases in full.
“The very existence of this form of lending flies in the face of the age old yet still important and relevant financial lesson of spending within your means – a lesson worth remembering amid the rising cost of living, compounded by bumper energy bills.
“The BNPL market is now too big to overlook, with the use of such products having nearly quadrupled in 2020 to reach £2.7bn, according to the City watchdog. Regulation can’t come soon enough.”