Popular “buy now, pay later” shopping services will face stricter regulations in the U.K.
Originally promoted by Klarna, a Swedish fintech start-up now valued at $10.6 billion, these services let customers spread the cost of their purchases over a period of interest-free installments. Klarna has raised a total of $2.1 billion in funding to date and said in the report it welcomed the move toward regulation, according to areport in CNBC.
The U.K. Treasury said buy now, pay later firms will now come under the supervision of the Financial Conduct Authority, which regulates financial services firms and markets in the U.K.
Such firms will be required to conduct affordability checks before lending to customers, the government said, while people will also be allowed to escalate complaints to the U.K.’s financial regulator.
BNPL products increased in popularity during the pandemic as more people turned to online shopping during the global lockdown.