Swedish payments company Klarna has unveiled a ‘pay now’ option ahead of a regulatory review on the UK buy now, pay later (BNPL) market.
The group said the new offering will allow customers to pay immediately and in full, wherever Klarna is available, “with the same payment experience whether they choose to pay now or later”.
READ: Klarna transactions soar as US users hit 20mln
Klarna stressed that it’s known in the UK for its BNPL schemes but globally it offers “a wide range of payment and shopping services”, including the ‘pay now’ option.
“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,” said co-founder and chief executive Sebastian Siemiatkowski.
“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.”
The Treasury is expected to soon launch new rules for the BNPL market, which has been criticised for making it too easy to pile up debt, especially for younger or low-income users.
“The BNPL market is now too big to overlook, with the use of such products having nearly quadrupled in 2020 to reach GBP2.7bn, according to the City watchdog. Regulation can’t come soon enough,” said Myron Jobson, personal finance campaigner at interactive investor.
“The explosion of this form of lending in recent history underlines the importance of financial education from a young age. While it might be tempting to delay payment – and BNPL adverts can be very enticing and sometimes misleading – it can be a slippery slope into debt.”
“While debt is not inherently bad, knowledge on how to get a handle on it is crucial. BNPL firms should make it crystal clear to customers that they could be referred to debt collectors and their credit scores could be tarnished if they miss payments.”
