During the lockdown, millions of people have turned from paying by debit or credit card to making online purchases by a fast-growing new method — buy now and pay later "BNPL". But with roughly six companies, led by Klarna and Clearpay, now offering this service there is mounting concern about whether BNPL encourages people to buy things that they can’t afford.
While the FCA has already imposed some controls on BNPL practices, the sector remains largely unregulated, unlike, for example, the rival market in credit cards. Which?, the consumer rights organisation, is among those demanding tighter consumer protection rules. Even leading BNPL companies call for stronger regulations. Alex Marsh, the UK lead for Klarna, says: “Regulation has not kept up with innovation and the changes in consumer behaviour. That’s why we fully support appropriate regulation which meaningfully improves consumer outcomes.”