Klarna launches a physical card in the UK

PRAISETHESUN

WillPS said:

jimjames said:

jbrassy said:

adamp87 said:

Klarna has announced it is launching a physical card in the UK through Visa.

The card utilises the company’s buy now, pay later product and lets users defer payments on their purchases both in-store and online.

The card will initially only give owners the chance to “Pay in 30”, which allows customers the ability to delay paying the item until next month, however it plans to add additional payment options in the future.

In order to make money on each purchase, retailers which offer the payment solution are charged a small fee on each transaction.

Hasn't this type of service been around for years? Except most people call them credit cards?

Except this isn't a credit card so has no S75 protection and not regulated by CCA. A distinction many will not understand

What sort of Visa card will be issued then? Prepaid? Debit?

It'll have to operate using some form of credit won't it, otherwise the whole BNPL aspect wouldn't work if users had to pre-load the card ahead of purchases? 

born_again

PaulW922 said:

born_again said:

I wonder how the FCA will view this move. As they are already concerned by the "Buy Now Pay Later" surge with little or no affordability checks.

This just strikes me as another Pay Day loan bubble just waiting to burst

It is not really anything like a pay day loan, as the borrower pays nothing to use the service. There is no interest charged - you just pay the bill within 30 days. I think the risk with BNPL is that it is so easy, people spend more than they can afford. However that is ultimately a problem with all consumer credit 

While it is not in many ways the same as a PDL. FCA hit PDL for failing on the Affordability checks to people borrowing the money.
Which is just what the FCA is worried about with the BNPL companies. No checks on how much they can afford to repay.


https://www.cnbc.com/2022/01/26/klarna-launches-physical-card-in-the-uk.html

WillPS

PRAISETHESUN said:

WillPS said:

jimjames said:

jbrassy said:

adamp87 said:

Klarna has announced it is launching a physical card in the UK through Visa.

The card utilises the company’s buy now, pay later product and lets users defer payments on their purchases both in-store and online.

The card will initially only give owners the chance to “Pay in 30”, which allows customers the ability to delay paying the item until next month, however it plans to add additional payment options in the future.

In order to make money on each purchase, retailers which offer the payment solution are charged a small fee on each transaction.

Hasn't this type of service been around for years? Except most people call them credit cards?

Except this isn't a credit card so has no S75 protection and not regulated by CCA. A distinction many will not understand

What sort of Visa card will be issued then? Prepaid? Debit?

It'll have to operate using some form of credit won't it, otherwise the whole BNPL aspect wouldn't work if users had to pre-load the card ahead of purchases? 

Depends I guess, could follow the Curve model of technically being a prepaid debit card which they top up on the fly on your behalf - from some sort of loan facility?

What is all this offering to the consumer which they can't get from a credit card tho?

jimjames

WillPS said:

PRAISETHESUN said:

WillPS said:

jimjames said:

jbrassy said:

adamp87 said:

Klarna has announced it is launching a physical card in the UK through Visa.

The card utilises the company’s buy now, pay later product and lets users defer payments on their purchases both in-store and online.

The card will initially only give owners the chance to “Pay in 30”, which allows customers the ability to delay paying the item until next month, however it plans to add additional payment options in the future.

In order to make money on each purchase, retailers which offer the payment solution are charged a small fee on each transaction.

Hasn't this type of service been around for years? Except most people call them credit cards?

Except this isn't a credit card so has no S75 protection and not regulated by CCA. A distinction many will not understand

What sort of Visa card will be issued then? Prepaid? Debit?

It'll have to operate using some form of credit won't it, otherwise the whole BNPL aspect wouldn't work if users had to pre-load the card ahead of purchases? 

What is all this offering to the consumer which they can't get from a credit card tho?

No affordability checks? No credit check?

PRAISETHESUN said:

WillPS said:

jimjames said:

jbrassy said:

adamp87 said:

Klarna has announced it is launching a physical card in the UK through Visa.

The card utilises the company’s buy now, pay later product and lets users defer payments on their purchases both in-store and online.

The card will initially only give owners the chance to “Pay in 30”, which allows customers the ability to delay paying the item until next month, however it plans to add additional payment options in the future.

In order to make money on each purchase, retailers which offer the payment solution are charged a small fee on each transaction.

Hasn't this type of service been around for years? Except most people call them credit cards?

Except this isn't a credit card so has no S75 protection and not regulated by CCA. A distinction many will not understand

What sort of Visa card will be issued then? Prepaid? Debit?

It'll have to operate using some form of credit won't it, otherwise the whole BNPL aspect wouldn't work if users had to pre-load the card ahead of purchases? 

Good question. It will be some form of credit as Klarna are paying and getting the money back but it's not a credit card so is unregulated.

Sabbathdei

I have a Klarna account but I mainly use Clearpay occasionally. My “credit limit” is £1000 but I’ll never spend anywhere near that, I just buy clothes occasionally and repay on time. Anyway my point is that when I signed up to both I was wary at first because I thought it was too good to be true, and as a previous poster mentioned the whole system seems like a bubble waiting to burst. Very little credit checks, if any, and everything’s nice until you miss a payment. (Clearpay have a virtual card now too for use in shops which I’ve signed up to but haven’t had a chance to use due to a lack of participating shops in my area) 

I’ve registered my interest for the Klarna card and saw this, their criteria for acceptance. Not exactly difficult to get. 

Nice card though.