Klarna, the leading figure in the growing Buy Now Pay Later industry, has announced it will be launching its first physical card in the UK.
The card gives customers the options to postpone paying for an item for up to 30 days from the purchase date. Those that need it can also apply for an additional 10 days without the imposition of any late fees.
Previously, such services were only available at the checkout of online retailers or via an app. Klarna’s physical card has already been launched successfully in Germany and Sweden, boasting 800,000 customers across the two nations.
While Buy Now Pay Later (BNPL) services have been around for a while, they really took off during the pandemic. Data from TSB showed a 59% increase in usage in 2021 compared to the previous year, with one fifth of UK residents using them at least once a month.
There are now numerous companies offering similar services, but Klarna is the largest in the UK with over 15 million customers. It is also the most valuable fintech company in Europe, worth around $46bn. The Swedish firm already has 400,000 customers on the waiting list for its new card, which can be integrated with both Google and Apple Pay.
The move will be seen as a move into the more traditional payment industry, with Klarna having made no secret of wanting to challenge high street banks and customer reliance on credit.
“Consumers are rejecting credit products which charge double-digit interest rates while allowing repayments to be put off indefinitely,” said Alex Marsh, head of Klarna’s UK operations.
“For online purchases where credit makes sense, buy-now-pay-later has become the sustainable alternative with no interest and clear payment schedules. The launch of Klarna Card in the UK brings those benefits to the offline world, giving consumers the control and transparency of BNPL for all of their in-store purchases.”
Despite strong growth and a positive reception from customers, concerns have been growing for some time that BNPL could be driving consumers further into debt. A Which? report last year showed that a large proportion of people who used Buy Now Pay Later services were not aware that they were taking out a loan. Low eligibility criteria and a lack of clarity on the nature of the product were highlighted as causes of this.
As it has only found mainstream popularity relatively recently, the BNPL remains outside the remit of the Financial Conduct Authority (FCA). This is in the process of changing however, with the FCA gearing up to regulate the industry later year.
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