Amid scrutiny of buy now, pay later (BNPL) firms by the U.K., Klarna has cautioned that time will be needed to put plans in place for regulation of the industry, the Financial Times reported.
Klarna said, per the Financial Times, that credit reference agencies “do not currently have the internal processes and infrastructure necessary for us to share data on our buy now, pay later products.”
However, the BNPL firm said it moved discussions forward with the companies and “the timeline for implementation will largely be driven by the agencies’ ability to update their systems, and we are working with them to ensure this can happen quickly.”
Klarna was replying to a report from the Financial Conduct Authority (FCA). The FCA says that the BNPL space, which is mostly unregulated, must fall under its regulations “as a matter of urgency.”
A report published by the FCA after a four-month review headed up by past Interim Chief Executive Christopher Woolard indicated that the BNPL industry will now be regulated by the FCA.
Klarna and other BNPL companies, such as Laybuy, Clearpay and others, let shoppers divided payments up across multiple weeks without fees or interest unless they don’t pay back on time.
PYMNTS’ March and September 2020 polls included 15,000 American consumers. The polls discovered that millennials who favor BNPL tend to because they feel that the fees and interest rates are clearly explained, a reason listed by 42 percent of respondents, and that this option helps them keep track of their spending, a reason cited by 39 percent of respondents.
As previously noted in this space, millennials have displayed remarkable interest in BNPL offerings. This age demographic leads in the early adoption of BNPL, particularly older “bridge millennials” — those between the ages of 32 and 41, who tend to have greater purchasing power than their younger counterparts. PYMNTS research indicates that 11.5 percent of bridge millennials have utilized BNPL.
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