“We firmly believe that most of the time, people should pay with the money they have, but there are certain times where credit makes sense,” says Klarna CEO, Sebastian Siemiatkowski in a statement on Monday “The changes we are announcing today mean that consumers are fully in control of their payments whether they pay now or pay later.”he adds.
The London — Swedish fintech firm Klarna, has said it is introducing a number of changes to its product in the U.K., as regulators in the country prepare to tighten regulation on the fast-growing “buy now, pay later” industry.
One of the biggest updates Klarna is implementing is stronger credit checks. The company said a new tool will let users share income and spending data from their bank accounts to determine whether they can afford future repayments. The feature is voluntary, a Klarna spokesperson said. The firm doesn’t conduct hard credit checks on its customers, meaning their credit score shouldn’t show up on their credit history.
The firm is to also launch the ability for users to pay for things instantly in one go, as well as clearer language at checkout letting users know they are taking out a loan with the firm and may be penalized for missing a payment.
The rapid growth of the sector during the coronavirus pandemic has prompted regulatory scrutiny in the U.K. The British government is expected to release a consultation on its plans later this month.