News

Klarna Lets Customers Opt Out of Credit

The BNPL giant believes that customers should be given the option to decide when using the credit makes sense for them and opt out if that doesn’t benefit their financial health

Klarna credit

Image: motionarray.com

Klarna, the BNPL provider and a global shopping platform, has introduced a new credit ‘opt out’ feature to its app to help consumers save time and money, along with supporting their mental and financial health.

Basically, the option simply allows Klarna customers to voluntarily shut down their credit facility if they feel that’s the right thing to do. However, most traditional credit providers do not give their clients the opportunity to switch their credit lines on/off.

Consumers who chose to ‘deactivate credit’ will no longer be able to use Klarna Pay in 30, Pay in 3 or Financing products. Once they have dealt with their debt issues and decide to opt-in for the credit options again, they can reactivate credit services by contacting Klarna’s customer service teams.

“Unlike credit card companies, who push you to put all your purchases on credit, we believe that consumers should only use credit when it makes sense for them,” says Klarna CEO Sebastian Siemiatkowski.

The initiative is a viable variant of response to consumer groups which have been actively campaigning for stricter regulation regarding BNPL providers amidst the cost-of-living crisis. Their point is that BNPL and similar short-term credit forms often lack proper disclosure of the debt consequences, which might mislead consumers.

Thus, even though BNPL demand soars in UK this year, it was previously reported that half of British Zoomers regret using unregulated BNPL products. Apparently, many people simply don’t realize the dangers of easy access to credit, while the BNPL providers don’t run any kinds of credit check to treat their loans more responsibly. Therefore, despite the great popularity of such services, BNPL financing has been facing unprecedented challenges lately.

Meanwhile, in the absence of proper regulation, Klarna has taken a step towards customer empowerment. “It’s encouraging to see a major provider helping consumers to take more control over whether they’re using credit – and other BNPL providers could follow their lead and provide consumers with more control over their spending,” believes Rocio Concha, director of policy and advocacy at consumer group Which?.

Nina Bobro

1428 Posts 0 Comments

https://payspacemagazine.com/

Nina is passionate about financial technologies and environmental issues, reporting on the industry news and the most exciting projects that build their offerings around the intersection of fintech and sustainability.