Fears over buy now, pay later firm’s credit card

CONTROVERSIAL buy now, pay later firm Klarna has launched a contactless credit card that shoppers can use on the high street.

The unregulated lending service is already used by millions of online spenders to put off payments or split them into instalments.

The Swedish company has now introduced a credit card that allows customers to buy without having to pay for a further 30 days.

Critics fear its move on to the high street will mean shoppers spending more than they can afford.

Labour MP Stella Creasy said: ‘We have no idea what regulations are going to come into place and in the meantime this industry is expanding at a rate of knots.

‘We know many shoppers who use these companies end up spending more than they can afford.

‘When so many families will be affected by the cost of living crisis, it is incredibly worrying.’

City watchdog the Financial Conduct Authority said a year ago that the industry needed ‘urgent’ regulation. The Government has only this month closed its consultation, and laws to protect consumers are unlikely to be in force until the summer.

The Klarna Card comes in either pink or black and will be accepted in any store that accepts Visa. More than 400,000 spenders have already applied for one in advance.

The lender says it will carry out credit checks before accepting any applications.

Shoppers will be charged no interest on their credit or late fees if they fail to make repayments on time. If unpaid, the debt can be passed on to a collection agency.

Research by Credit Karma found half of buy now pay later shoppers view it as ‘easy credit’.

Alex Marsh, head of Klarna UK, said: ‘Last year consumers saved over £100 million in interest by using buy now pay later instead of highcost credit cards. Klarna has been calling for regulation for over a year.’