Klarna unveils credit ‘opt out’ feature in UK

Buy now, pay later provider Klarna has launched a credit ‘opt out’ feature in a UK-first, on the suggestion of Andrew Griffith MP, UK Economic Secretary to the Treasury.

The voluntary feature, which is available as a tool in the latest version of the Klarna app, allows customers to “pre-decide” not to use credit.

To activate the credit ‘opt out’, Klarna’s consumers need to enter the ‘settings’ tab in the app and select ‘deactivate credit’. This takes consumers to a page of resources and support for those dealing with indebtedness and they are no longer able to use Klarna ‘Pay in 30’, ‘Pay in 3’ or its financing products.

Consumers have to call Klarna’s customer service teams to reactivate credit services.

Klarna put the feature into production following a meeting between Sebastian Siemiatkowski, Klarna’s co-founder and chief executive officer, and Griffith less than a month ago.

Siemiatkowski said: “Unlike credit card companies, who push you to put all your purchases on credit, we believe that consumers should only use credit when it makes sense for them.

“That’s why I loved Andrew’s suggestion of a voluntary credit ‘opt out’, so people are in control of their finances.”

Griffith added: “As this government seeks to protect UK borrowers by bringing forward proportionate regulations for buy-now-pay-later products, I welcome this initiative which shows how a responsible business can use innovation to help protect vulnerable customers.”

Announcing the launch of the tool, Siemiatkowski called on other traditional credit providers, including American Express, HSBC and Barclaycard Payments, to follow its lead.

He tweeted: “Hey @BcardPayments, @amexUK, @hsbc let’s all agree that consumers should have the tools to switch off from credit if they feel it is not helping their financial goals. We’ve done it. Would love to see you guys follow.”

On 16 March this year, Klarna introduced capped late payment fees in the UK in line with other countries in which it operates, on the basis that “a total absence of late fees actually leads to less favourable outcomes for customers”.

It now charges a £5 fee for late payments after a seven-day “grace period” and sending a minimum of four “friendly reminders”.

This month, Alex Marsh, head of Klarna UK, announced his departure on LinkedIn after five years.

He wrote: “It’s been a genuine pleasure working within and alongside such passionate, innovative and dynamic teams – and I wish you all the very best as Klarna will no doubt continue to trailblaze in the world of payments, shopping and banking.”