Klarna is repositioning its buy now, pay later product range in the UK in response to sustained criticism of its business practices, introducing the ability for consumers to pay in full at the checkout, stronger credit and affordability checks, clear checkout language, simplified T&Cs, improved complaints handling and removal of last remaining late fees.
The Pay Now option brings the UK up to speed with market practices employed by Klarna in over 20 overseas territories, enabling consumers to pay immediately and in full, wherever they see the Klarna button. The move redressed complaints that the app has been designed to lure users into debt and expands Klarna's business beyond pure play BNPL to take on the likes of PayPal and other mobile wallets.
Pay Now is launched alongside a package of consumer-focussed changes deisgned to improve standards and services in the UK market. Central to this, Klarna has begun to apply Open Banking services, enabling consumers to share income and spending data from their bank accounts to confirm they can afford future repayments.
Crucially as a complement to this, Klarna is working with credit referencing agencies to provide improved credit scores for responsible BNPL users, adressing a major bone of contention about hidden debt on BNPL products.
Klarna has also strengthened the language visible at check-out to make it clear that BNPL options are credit products, with consequences for missed payments. It has also worked together with the consumer group, Fairer Finance, to make sure that Terms & Conditions are easier to understand.
Additionally, Klarna has established its own complaints adjudicator for more ways of fair redress for consumers, having been informed by the Financial Ombudsman Service (FOS) that BNPL products couldn’t currently be referred on a voluntary jurisdiction basis.
Finally, Klarna is removing any remaining late fees from its regulated Financing product, which consumers use to spread the cost of higher value purchases over 6 - 36 months.