Klarna users have been issued a two-week warning as up to £10 fees are set to be introduced for those who miss a payment.
The 'buy now, pay later' service allows people to purchase online items with money from Klarna rather than their own bank. They can then pay Klarna back after the fact, making it handy when money is getting a bit tight in the run-up to payday.
The service asks that users pay the sum back in a set timeframe, but currently do not issue late penalty fees. However, this will change in the UK from March 16.
In an email sent to customers titled 'Important message from Klarna', the service stated that users will be hit a £5 late fee for payments that remain unpaid for seven days.
Customers could then be hit an additional £5 fee, as Klarna has stated it will impose a maximum of two late payment fees per order, which is capped at a total of £10.
The email stated: "We're reaching out to let you know that from March, 2023, Klarna will be introducing late fees for missed payments made with Pay in 3 and Pay in 30 days in the UK.
"Late fees will only be applied if a payment remains unpaid after the due date has passed. At the same time, we’re doing lots to help you avoid missing a payment, including offering automatic payments, sending friendly reminders, and applying a grace period before we charge a fee."
"Not charging fees feels consumer-friendly, but we’re worried it drives the wrong behaviour," Klarna UK boss Alex Marsh told City AM. "Our data now shows that a total absence of late fees actually leads to less favorable outcomes for customers: with less reason to pay on time, customers are more likely to miss a payment."
Klarna is a popular service in the UK, and can be used to purchase items from popular sites such as Deliveroo and PrettyLittleThing.
This month, the UK Government's HM Treasury launched a consultation to see if buy now, pay later services could be brought under Financial Conduct Authority regulation.
Buy now, pay later providers Laybuy and Clearpay already charge £6 late fee to shoppers in the UK.
How the fees will work
When you purchase an item with Klarna you will be given a due date for payment. The service allows you to either pay them back inside 30 days or in 14 days through three instalments.
If you miss your deadline there will be a seven-day grace period and the service claims that it will send at least four reminders before issuing late penalty fees.
According to the email, an additional £5 fee will be applied if you outstanding fee remains unpaid, however this will only occur once as it is capped at £10.
Martin Lewis' MoneySavingExpert now recommends that users set up 'autopay' to make sure that they do not miss repayments.
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