Yahoo Finance Buy now, pay later firm Klarna launches payment card in the UK
Swedish fintech giant Klarna has launched a card that can be used for in-store payments in the UK.
The company on Wednesday announced the launch of Klarna Card, a Visa card that lets users delay payments on their purchases, both in-store as well as online.
The card, which will be offered in black or pink, allows consumers to pay up to 30 days after the purchase. No interest or late fees will be charged. Additional payment options will be added in the future.
Shoppers will be able to use the card via Apple or Google Pay, or by contactless payment.
Klarna plans to roll the card out gradually, with a view to open eligibility to all customers by early 2022. It has opened a waitlist where users can sign up in the meantime. Some 400,000 consumers have already signed up.
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Borrowers will also have to go through credit checks to be eligible for the card. Customers will have to be over 18, have an income of at least £12,000 and have a “good credit history”.
Eligibility also comes through a soft credit check rather than a hard search associated with a credit card. Customers must also have at least one purchase paid through Klarna on time.
The card is already available in Sweden and Germany, where it is now used by over 800,000 people, according to Klarna.
Alex Marsh, head of Klarna UK, said: “For online purchases where credit makes sense, buy now, pay later (BNPL) 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.”
Like other buy now, pay later firms, Klarna offers a product that splits the cost of users’ purchases over a period of monthly instalments, typically interest-free. The firm makes money by charging a small fee on each transaction for retailers offering its payment method.
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Klarna said the the launch is a "major step" in giving UK consumers the flexibility to pay later for purchases everywhere, without the inherent risks of interest and revolving credit.
"Consumers are rejecting credit products which charge double-digit interest rates while allowing repayments to be put off indefinitely,” Marsh said.
BNPL products, however, have also drawn criticism, with consumer body Which? warning earlier this month that stronger safeguards are needed to protect the millions of UK shoppers who do not realise they are taking on debt by delaying their payments.
Myron Jobson, personal finance campaigner at Interactive Investor, said: “It looks like a credit card, but crucially it isn’t — blurring the line between regulated and unregulated credit. Klarna and other BNPL providers are not required to abide by the same regulations as more traditional creditors, requiring things like affordability checks and making sure customers are treated fairly.
“Regulation of the BNPL industry can’t come soon enough as the increase in the cost-of-living risks even more people turning to BNPL schemes to help tide them over."
