Many Klarna shoppers will soon be hit with fees if they do not make payments on time.
The short-term credit provider said it is introducing the new charges to UK customers in an attempt to curb loan defaults. From March 16, Klarna will charge customers up to £5 for missed payments.
Fees will be capped at 25% of the order value with no more than two fees per order.
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Klarna bosses have said they are concerned that their no-fee approach is encouraging irresponsible spending and with less reason to pay on time, customers are more likely to miss a payment.
Buy Now Pay Later (BNPL) has surged in popularity in recent months as consumers try to budget their way through the cost of living crisis. A recent report by the personal finance experts at NerdWallet revealed that as many as 15% of UK consumers who are currently in debt owe money to BNPL providers such as Klarna or Clearpay.
Demand for BNPL is particularly common among younger generations, specifically millennials as over one in five (22%) adults aged 25-34 admit to being in debt to the short-term credit providers.
The report also discovered that women are almost twice as likely as men to owe money to BNPL providers with 20% of women stating they owe money here compared to just 11% of men.
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