![]() ![]() It has been a learning experience as the sector evolved,” Alex Marsh, head of Klarna UK, said. “A common criticism has been the visibility of use of these products and ability of consumers to build up significant debt. Klarna has acknowledged some of this criticism. Repeated research has shown that, when tempted by Klarna at online checkouts, many customers are unaware they’re entering a credit agreement that can lead to late fees, pursuit by debt collectors and damage to their credit history. The Swedish fintech giant, valued at $46 (£33) billion in a recent investment round, has drawn criticism for selling users repayment plans with no affordability checks and for encouraging young and vulnerable people to overspend and get into debt. ![]() The company has also abolished late fees from its repayment plans of six months or longer and is reportedly considering banning repayments using credit cards. ![]() ![]() “We need to be more clear in our messaging that first and foremost, use money you have,” founder Sebastian Siemiatkowski told The Telegraph in an interview over the weekend.Ĭustomers will also be given the opportunity to pay immediately through Klarna, rather than spreading their payments across weeks and months.Īdditionally, Klarna will run “stronger credit checks” on customers and allow users to prove they can afford repayments by sharing income and spending data from their bank accounts through the UK’s open banking infrastructure. The new framing will also try to discourage users from getting into debt, the company said. Part of the change will be new wording that will make it “absolutely clear” to customers that Klarna is a type of credit, with penalties for missed payments. Facing increased scrutiny from regulators and the media for the buy now, pay later (BNPL) service it made ubiquitous at online checkouts, Klarna has overhauled its offering, launching a “pay now” option and clarifying to consumers that “pay later” is a form of credit. ![]()
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