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Klarna introduces credit opt outs

Klarna has updated its app to provide budget-conscious Brits with a tool to opt out of taking on more debt and called on credit card companies and other providers to follow suit.

2 comments

Klarna introduces credit opt outs

Editorial

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community.

To activate the credit ‘opt out’, consumers enter the ‘settings’ tab in the Klarna app and select, ‘deactivate credit’. Once credit has been deactivated, consumers are taken to a page of resources and support for those dealing with indebtedness and they will no longer be able to use Klarna Pay in 30, Pay in 3 or Financing products.

To reactivate credit services, consumers will need to call Klarna’s customer service teams.

In a Twitter thread introducing the new feature, Klarna CEO Sebastian Siemiatkowski called on traditional credit providers to follow Klarna’s lead:

Says Siemiatkowski: “Unlike credit card companies, who push you to put all your purchases on credit, we believe that consumers should only use credit when it makes sense for them."

The initiative has been welcomed by consumer groups which have been camapigning for stricter regulation of BNPL providers in the midst of a cost-of-living crisis.

Rocio Concha, director of policy and advocacy at consumer group Which?, comments: “It’s encouraging to see a major provider helping consumers to take more control over whether they’re using credit - and other BNPL providers could follow their lead and provide consumers with more control over their spending."

All the same, Concha says that it is only long-awaited government regulation that will properly protect consumers from BNPL lenders. "That means greater transparency over the risks of missed payments and credit checks before consumers are cleared to use BNPL providers,” she says.

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Comments: (2)

A Finextra member 

Feels like a PR stunt to me. 

Ketharaman Swaminathan

Ketharaman Swaminathan Founder and CEO at GTM360 Marketing Solutions

Kudos to Klarna. Under the circumstances, this is the most we can expect from a for-profit company that clearly has a vested interest in selling more debt, not less debt.

Creating the friction hotspot of requiring a telephone call to reactivate credit shows sincere intention. If it wanted to, Klarna could have enabled reactivation by toggling a switch on the app and not sharing that info with its PR agency. 

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