The Government has revealed long-awaited plans to regulate "buy-now pay-later" firms, but the new rules won't come into effect for several months.
Buy-now pay-later (BNPL) companies such as Klarna, Clearpay, Laybuy and Openpay allow consumers to pay for goods in instalments. The BNPL firm pays the retailer for you and you then agree to pay the BNPL firm back over a few weeks or months, meaning you can spread your shopping costs. It's usually interest and fee-free but late fees are charged if you miss a repayment.
But while BNPL has surged in popularity, particularly among young people, the lenders remain largely unregulated, raising concerns about people falling into debt. Britain's buy-now pay-later sector nearly quadrupled in size during the pandemic in 2020 to £2.7bn.
