Monzo joins rush to offer ‘buy now, pay later’ products

MONZO is planning to join a crowded field of “buy now, pay later” providers as the digital bank struggles to turn its fortunes around after a turbulent year.

The start-up will be among the first regulated lenders to allow people to defer online shopping payments, joining payments companies Klarna and Clearpay in the rapidlygrowing industry.

Buy now, pay later schemes are seen as an alternative to credit cards, allowing online shoppers to spread the cost of purchases over weeks or months. Typically, no interest is charged and the lender takes a commission from the retailer instead.

The burgeoning industry has none the less attracted concerns that it may encourage shoppers to make payments they cannot afford.

Monzo is preparing to announce its own product next week, it is understood. The plans were first reported by the Evening Standard.

Most providers are not regu- lated by the Financial Conduct Authority (FCA), which is yet to get to grips with the relatively new buy now, pay later market.

However, Monzo’s banking licence means it will have to carry out affordability checks on customers.

The online bank became one of Britain’s hottest fin- tech start-ups after its launch in 2015 and signed up 5m customers attracted by its coral-pink cars and userfriendly app, but has struggled to maintain momentum.

It reported a £130m loss for the year to February, while revenue growth slowed, and has said it will need to raise further capital to continue operating despite cutting hundreds of staff.

The company is also the subject of an investigation by the FCA for potentially breaking money laundering laws between 2018 and 2021. Monzo’s founder Tom Blomfield left the company earlier this year, saying he had suffered from stress.