Barclays and Klarna have locked themselves in a row to buy now, pay later as regulators turn the screw on the fast-growing loan sector.
Alex March, the UK head of buy now, pay later (BNPL), pioneer Klarna, said on Thursday it was “breathtaking” for Barclays to criticize companies like his while charging 10% interest on loans packaged as BNPL.
A senior Barclays executive responded by telling the Telegraph that Klarna should focus on its own business and customers rather than concentrating its efforts on targeting rivals.
Anthony Stephen, managing director of Barclays Partner Finance, said: “Warn us. Challenge us. But follow the rules: protect your customers.
“Don’t have late payments or watch your losses soar into the hundreds of millions and then lay off your workforce because you’re trying to cut costs.”
Klarna laid off 10% of its workforce last month, citing a ‘tumultuous’ start to the year, with Russia’s invasion of Ukraine, a sharp rise in inflation and a likely recession on the horizon .
The war of words between the two lenders comes as the government prepares to hit the BNPL sector with tougher rules, after campaigners and watchdogs warned the new form of borrowing risked putting more people into debt. people.
Earlier this week, the Treasury announced tougher rules for BNPL providers, including affordability checks and greater transparency between lenders.
Klarna welcomed the rules but criticized the banks, saying they offered high-interest loans under the BNPL name.
In a partnership with debt charity StepChange, Barclays released research on Thursday that found 876,000 people were at risk of ‘unmanageable debt’ this year if retailers did not act to demand loans more responsible from unregulated BNPL providers.
Klarna, which has doubled the number of UK retailers it works with to 22,000 over the past 18 months, called the finding “very flimsy” and “very condescending”. Mr Marsh accused Barclays of watering down the loan terms of its own range of BNPL products.
“It is mind-boggling and frankly irresponsible in a cost of living crisis, that Barclays is using StepChange to endorse its high-cost installment credit product which charges 10.9% interest and to lobby against interest-free BNPL products. and manageable,” Mr. Marsh said.
Barclays said Klarna is focused solely on its relationship with Amazon, which charges 10.9% and around 95% of Barclays’ BNPL loans, through 35 retailers, are offered at zero interest.
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This notice was published: 2022-06-23 20:49:00