• Rob McElroy, CEO at Sopra Steria Financial Services Limited


• 05.05.2022 01:15 pm
#BNPL

“Buy Now Pay Later (BNPL) spending habits will soon be reflected in your credit score following Klarna’s announcement that it will start sharing data with credit agencies from 1st June. The impact of this is currently unclear. Even if users have a good repayment history, some providers could still judge this as a risk factor given the potential BNPL has to mitigate financial stress. 

Originally designed for large expenditures, many increasingly use BNPL for everyday spending as it is presented as an alternative payment option rather than an offer of credit. The interest-free payment plans may tempt shoppers, but there’s no doubt that this can lead to people being trapped in a cycle of growing repayments. 

With this in mind, it is paramount that regulations are put in place to provide strong customer protection: from providing consumers with a better understanding of the total lifetime cost of the BNPL product to clearer terms and conditions and appropriate vulnerability checks. Only when these issues have been addressed, and the industry has wider regulations can we have more confidence that the consumer is being protected and ultimately able to better manage their finances.”