Recently some of you may have come across a campaign, originating on social media, calling for regulatory change in the Buy Now Pay Later sector. We felt it important to be clear, both to our customers and merchant partners, on our views regarding regulation and how committed we have been and continue to be to ensure transparency across everything we do.
Our view on regulation.
Firstly, it’s important to say that we always welcome feedback from the community on how we can communicate with them more clearly. We adhere strictly to all guidelines set out by the Financial Conduct Authority (FCA) and the Advertising Standards Authority (ASA) and work closely with all our merchant partners to ensure that any time they reference Klarna, they follow correct procedures. We have worked closely alongside the FCA to assist them in better understanding the Buy Now Pay Later category, providing regular insights and access to our data. Where regulation is relevant to our products, as is the case with our financing product, we adhere to it and would face heavy penalties, as others would, if we did not clearly communicate our offering fairly and clearly at all stages.
The recent campaign in question references the ‘Buy Now Pay Later’ category, which encompasses a wide range of financial products and companies. These range from deferred invoice payments, to traditional store cards as well as regulated credit products. Each of these is unique, and operates differently. Here at Klarna, our two primary Pay later products, Pay in 30 days and Instalments, have always been fee free and interest free, even when payments are missed.
Your credit score and debt collection agencies.
As well as being fee and interest free, our two Pay later products, Pay in 30 days and Instalments will never impact your credit score. This includes at the point of application, if a payment is missed, or if the outstanding balance enters a debt collection stage.
With these two products, if an outstanding balance remains unpaid for several months and attempts to contact a customer have failed, we sometimes pass these over to a debt collection agency. We have carefully selected our debt collection partners to ensure that, even if the debt is passed over, use of these two Klarna products will not impact your credit score.
Our third product, financing, operates like a traditional credit product and requires a hard credit check and a formal credit agreement that all applicants sign at the point of application. To date, less than 0.1% of Klarna customers in the UK have had their credit score impacted following the use of our financing product.
If for any reason a customer believes their credit rating has been negatively affected through no fault of their own, please get in touch with our team and we can work out what has happened and if applicable, work with our credit reference agencies to reverse that.
We are customer obsessed.
Here at Klarna, the safety and wellbeing of our users is our top priority and we are constantly striving to provide the best customer experience possible. A core part of this is ensuring that we are transparent and open in all that we do and say. We always welcome feedback on how we can do better, be clearer and reduce misunderstandings. We believe there are always areas for improvement. That’s why we have established a number of initiatives, such as our Consumer Council, where we meet with users to listen to concerns around our products or marketing. Any issues raised in these meetings are discussed at length at a senior level, and new processes are put in place accordingly. We have also been working on a number of initiatives for sometime that will enhance customer understanding and trust in our brand and our products. We can’t wait to introduce you to them…
We’d love to hear if you have any questions or concerns, and you can get in contact with us by emailing firstname.lastname@example.org