Klarna lets shoppers buy items in monthly instalments or within 30 days’ time. If a customer misses a payment it’s not currently reported to credit reference agencies – but Klarna’s UK lead Alex Marsh told Radio 4’s Moneybox that this will soon change.

He said: “What we are looking at in terms of to protect consumers is to work with the credit reference agencies to enable reporting in the future. We work with debt collection agencies to support customers on payment plans. They [debt collectors] do not have the ability to report back into the credit reference agencies.”

According to Crediful, Klarna claims it only lends to customers it believes can pay on time and closes down the accounts of those who miss payments.

Justin Basini, CEO and co-founder of ClearScore, said: “Klarna’s recent announcement that they plan to now report missed payments is a welcome step, however it is too little, too late. Although it’s great that they’re starting to take their responsibilities to consumers seriously in reporting missed payments to credit reference agencies, this move doesn’t go far enough in protecting consumers before they fall into debt.

“Klarna (and other BNPL providers) currently only perform soft searches on a person’s credit report before they take out a BNPL product, rather than the usual hard search that most credit providers use to assess whether a person can afford to take on debt.

“This means they’re not getting full visibility of a person’s true credit status before they lend to them, which piles on debt to those who can’t afford to pay it back. Klarna would best serve their users by searching credit files and doing their due diligence before the consumer gets into debt, rather than reporting on missed payments once it’s already too late.”

A study by Compare the Market found that buy now pay later purchases were up by a third during lockdown.

The Advertising Standards Authority (ASA) announced last week that buy now pay later adverts must make it clear they are offering a form of credit. It said it wanted customers not to be misled.