Klarna customers have complained after the buy now, pay later firm announced plans to axe the free version of its credit card. The move means all customers will be required to pay a minimum monthly membership fee of £4.99 to use its basic credit card, following the withdrawal of the free version on November 13 in the UK.
Membership tiers and customer reactions
Klarna provides several different membership tiers, with the priciest costing £44.99 per month. Klarna credit cards are accepted at any retailer that takes Visa, while a standard Klarna account operates with specific partners and other services offered by the company.
The buy now, pay later firm has begun notifying customers about the changes, which come as part of an overhaul of its existing membership programme. One customer commented: "I'm in UK and just received email about this. I am out. No way I'm paying a monthly subscription just to use a credit card."
Another added: "It's changing from the 13th of November will need the £4.99 membership to continue to use the card. So yeah will just pay the balance I have and close the card."
Company response and new regulations
Klarna told The Sun that the overwhelming majority of customers use Klarna at the checkout when it is available as an option, and confirmed this service does not require a paid-for membership. A spokesperson for the firm said: "This change is part of a revamp of our memberships programme, which includes a complete removal of service fees and a big boost to our cashback offering."
"With service fees gone, a membership works out cheaper for some customers. The debit card is still free for everyone, and so are Klarna's flexible payment options at the 1.2 million merchants that offer us at checkout."
"The value of a Klarna membership is far more than it costs at every tier, and at as low as 99p for the first month for new members we're making it easy for people to try it out and see the value for themselves."
Impact of new BNPL rules
New buy now, pay later regulations were brought in during July this year, which offer greater protection for millions of consumers. Buy now, pay later enables shoppers to spread the cost of purchases, typically interest-free, across a fixed period of time.
The sector has faced significant criticism in recent years over its previous lack of oversight, and the resulting risk of customers accumulating unmanageable debt should they fall behind on their repayment schedule. The new rules mean buy now, pay later is now subject to FCA regulation, which means companies must obtain authorisation from the regulator in order to provide buy now, pay later agreements. They will have six months from July to apply for full FCA authorisation.
Under the new framework, buy now, pay later providers must carry out proportionate credit and affordability checks, and anyone using their service will also receive clear, upfront information regarding their agreement. While most BNPL lenders do not charge interest, late fees can be applied if you miss a payment.
Missed payments can also be flagged to credit reference agencies, which may have a detrimental effect on your credit score. Should someone find themselves in financial difficulty and unable to keep up with their payments, firms will now also be required to offer greater support, including directing them towards free debt advice. If things go wrong and a customer is treated unfairly, they can now lodge a complaint with the Financial Ombudsman Service (FOS).
