Klarna to start charging late payment fees in UK
Swedish buy now, pay later (BNPL) fintech Klarna is to start charging late payment fees in the UK from next month, City AM reports.
Klarna to start charging late payment fees in the UK
Late-paying users will be hit with a £5 penalty from 16 March, with fees capped at 25% of the purchase value and no more than two fees per order.
Writing for City AM, Klarna UK CEO Alex Marsh says: “Not charging fees feels consumer-friendly, but we’re worried it drives the wrong behaviour.”
Marsh cites Klarna research that shows no late fees lead to “less favourable outcomes” for customers, with Belgium and the Netherlands seeing a 20% improvement in on-time payments after late fees were introduced there.
Additionally, the fintech will use funds collected from fees to support customers, contacting those with long-overdue payments and offering to waive half of their balance.
Eligible customers will need to pay the remaining 50% before making any additional purchases and will avoid having their debt sent to debt collection.
“The programme will help customers who are behind on payments avoid debt collection and get back on track with their money management,” Marsh says.
Klarna’s decision to confront potential issues around BNPL and consumer debt amid a cost of living crisis comes as BNPL regulation in the UK is about to be tightened.
