Fintech & Ecommerce

Klarna to Introduce Charges for Late Payments

Swedish fintech company Klarna has announced the start of charging late payments from customers in the UK.

Klarna to Introduce Charges for Late Payments

Source: Pixabay.com

This decision was made by the company in order to stop the practice of significant delays and lack of payments on loans. Representatives of the firm note that currently, many customers prefer the Buy Now, Pay Later service to cope with the cost-of-living crisis.

Over the past year, this company has managed to significantly reduce its costs and increase profitability. In order for the financial result to remain at an acceptable level in the future, the firm will start charging a commission of 5 pounds sterling from customers who have overdue payments from March 16. There are no more than two fees per month for each order.

Alex Marsh, the head of Klarna’s UK division, said that the company is concerned that the lack of financial impact measures contributes to irresponsible spending on the platform. He noted that the refusal to charge fees is a positive fact from the point of view of consumer interests, but at the same time, this feature contributes to the rash and unjustified actions of customers.

Alex Marsh says that there is a principle of behavior according to which the minimum number of reasons to pay on time generates a high probability that the consumer will miss the payment.

Klarna plans to provide its customers with the possibility of automatic payments and a seven-day grace period before charging a commission.

Previously, the company introduced late payment fees in the Netherlands and Belgium. This solution allowed for a 20% index in the rate of timely payment. The results of a YouGov survey testified that 75% of British customers are likely to pay on time if there is a fine for late payment.

Alex Marsha said that part of the late fees will be used to repay the debts of customers who have accumulated even more debt.

The company has also developed a special customer assistance program, under which consumers are provided with financial support to repay debts and tools to inform about payments.

As we have reported earlier, Klarna and Schufa Pilot BNPL Over-Indebtedness Protection Solution.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.