'Buy now, pay later' schemes criticised for pushing Britons into debt
Big name retailers should offer online customers the option to opt out of 'buy now, pay later’ schemes, the Money and Mental Health Policy Institute (MMHPI) has claimed.
Such store credit schemes, supported by most fashion retailers including Boohoo, H&M, Missguided and Asos, are pushing customers into record levels of debt as they charge high interest rates of up to 30%.
MMHPI has also warned that people suffering from mental health issues are more likely to use these financing options, and twice as likely to fall behind on payments than those without.
Swedish firm Klarna, one of the largest e-commerce payments provider, said in 2019 it signed a partnership with a new merchant every eight minutes. Its collection of services, ranging from ‘pay in 3 instalments’ to ‘pay up to 30 days later’, are used by thousands of consumers each day.
In the UK, 6 million consumers used Klarna to buy products online during 2019, and over 55,000 new global consumers are joining the list weekly.
Klarna rival Clearpay powers the flexible payment options offered by Marks & Spencer, Anthropologie, The Hut and JD Sports.
Industry experts have criticised the wider availability of taking out credit with major retailers, who are essentially operating in the same manner as banks but without the same regulations.
Helen Undy, chief executive of MMHPI, told The Times: “This is a particular concern for people with mental health problems, who might find it harder to manage spending due to symptoms such as increased impulsiveness, or to understand the risks of taking out credit because of difficulties in remembering or processing complicated information.”
She added: “Retailers should also make sure that information about charges for missed repayments is made absolutely clear up front, so that consumers can better understand the implications of taking out this kind of credit.”
Copyright © 2023 FashionNetwork.com All rights reserved.