Swedish fintech firm Klarna on Monday said it is introducing a number of changes to its product in the U.K., as regulators in the country prepare to tighten regulation on the fast-growing “buy now, pay later” industry.
One of the biggest updates Klarna is implementing is stronger credit checks. The company said a new tool will let users share income and spending data from their bank accounts to determine whether they can afford future repayments. The feature is voluntary, a Klarna spokesperson said.
Unlike banks and credit card providers, Klarna doesn’t conduct hard credit checks on its customers, meaning their credit score shouldn’t show up on their credit history.
Klarna said it will also launch the ability for users to pay for things instantly in one go, as well as clearer language at checkout letting users know they are taking out a loan with the firm and may be penalized for missing a payment.
Klarna is one of the world’s largest buy now, pay later, or BNPL, operators. Such services let shoppers split their purchases into monthly installments, typically interest-free. In 2020, about $97 billion of global e-commerce transactions were processed through a BNPL platform.
New research from The Strawhecker Group analyzes key trends and consumer attitudes.
Download a free infographic covering several findings from the full report.
Consumers have increasingly adopted Buy Now, Pay Later (BNPL) services for multiple reasons; a desire for financial flexibility, a way to avoid incurring credit card debt, or to purchase items outside of their budgets. However, despite its popularity, consumer debt and missed payments have led to calls for additional research and regulation. Read the press release.
To take a closer look, The Strawhecker Group (TSG) conducted a survey of over 1,500 U.S. consumers in early 2021 with the goal of understanding domestic attitudes and perspectives on the use of BNPL services. The complete findings, a selection of BNPL provider profiles, and market landscape details can be found in the firm’s new report Buy Now, Pay Later: An Analysis of Key Trends and Consumer Attitudes.
Highlights of this extensive 81-page report include:
- Buy Now, Pay Later Background
- Key Players in the Buy Now, Pay Later Space
- Buy Now, Pay Later Consumer Survey
- Concluding Thoughts: The Future of Buy Now, Pay Later