Klarna is the latest Buy Now Pay Later firm to introduce a late fee, after its boss said customers were more likely to slip into debt if there were no consequences if they skipped a payment.
From March 16, customers who miss their repayments will be charged a £5 fee, in a major shift by the company, which has up to now not charged late fees in the UK. Until now, Klarna had been one of the only major Buy Now Pay Later (BNPL) providers to not charge any late payment fees, with Laybuy and Clearpay, both charging a £6 late fee to shoppers.
The BNPL firm says it's introducing late payment fees because its data shows they reduce the likelihood of borrowers falling behind on payments. It says fees have improved on-time payments by 20% in the Netherlands and Belgium, and boss of Klarna UK Alex Marsh says the move is aimed to help curb loan defaults as more shoppers use the payment method amid the cost of living crisis.
