With many of its customers struggling in the face of a cost of living crisis, UK supermarket chain Iceland is rolling out an interest-free BNPL product for use at its shops.
The Iceland Food Club allows members to apply for microloans of £25-100 on a pre-loaded card, which can be used in any of the firm's stores.
The loans are repaid at the rate of £10 a week, on a day of the member’s choice, and are available in six annual windows coinciding with school holidays, when family finances are usually most acutely stretched.
Critics have accused Iceland of encouraging customers to spend more than they can afford. Labour MP Stella Creasy, who has long campaigned on payday lenders, tweeted that the initiative is "deeply disingenuous".
However, Iceland boss Richard Walker has defended the Food Club, claiming that critics are "middle class people who have no difficulty accessing mainstream banks themselves, and would not think twice about paying for their own weekly shop with a credit card".
Walker says the Food Club has been developed in partnership with FCA-regulated Fair For You, a charity-owned ethical lender.
The initiative is also not a spur-of-the-moment "brainwave" and has been trialled through 18 months of regional pilots which found that 95% of participants found it helpful; 92% were able to end or reduce their use of food banks; and more than 80% were able to stop borrowing from high-cost loan sharks.
Says Walker: "All the evidence we have seen from our own trials - and from researching the widespread use of microcredit around the world - is that it is a really helpful way of managing low and irregular incomes, and improving the quality of life and the self-respect of those taking part."