Generation Z debt fears rise as Klarna extends its buy-now, pay-later credit to all online purchases
Klarna is extending its buy-now, pay-later (BNPL) credit to all online purchases amid concerns Generation Z will be drawn into debt for everyday purchases.
Bosses claimed the change could provide a serious challenge to credit cards as they do not charge interest or late payment fees.
But campaigners say the products encourage young people to spend more than they can afford.
Klarna lets customers to split payments into three interest-free instalments, or pay in 30 days, and has told retailers deferred payments encouraged customers to spend 55 per cent more
Yesterday Klarna, a successful technology start-up, said customers can now shop at any online retailer.
Klarna allows customers to split the payment into three interest-free instalments, or pay in 30 days, and has told retailers deferred payments encouraged customers to spend 55 per cent more.
Chief executive Sebastian Siemiatkowski said: ‘Klarna’s solution is a better solution for people because it is free of interest, it doesn’t have additional late fees, so it is better for the consumer.’
The Government has promised to consult on laws, after a review backed a regulatory crackdown.
A study found more 40 per cent of people who had used BNPL missed a payment. Activist Alice Tapper said: ‘They are not risk-free. They’re a form of credit and there are consequences to non-payment, including debt collection.’