It was kind of inevitable. After getting 16 million users hooked on using their platform, Klarna will start charging those who fail to keep up with payments. With these new Klarna late payment fees on the way, let’s have a look at what you need to know.
What Is Klarna?
I had so many problems with Klarna forcing their easy-debt scheme into the UK market, without regulation. They were advertising everywhere and almost every online retailer started accepting payment via this method. There were even reports of online sweet shops accepting Klarna. Imagine BNPL for sweets! What are we doing to this generation and the next?!
The BNPL method is fine for some people, but only if you actually intend to pay later. It is an easy way to get into financial difficulty by spending more than you can afford to pay back. This is where the problem comes into play. Some people can’t afford to pay back what they are spending via easy payment. This is probably why the Klarna late payment fees are being introduced. To try and push people into buying what they owe. However, simply owing more on the debt you accrue, isn’t really a solution.
Klarna Late Payment Fees
Starting from March 16th 2023, the Klarna late payment fee will become active here in the UK.
In the simplest of forms, if you miss a payment, you’ll be charged £5.
They will though, give you the option of making an automatic payment to catch back up with your repayments, before issuing this fee. There will also be a week-long grace period. During this, they will remind you about the missed payment, before charging the fee.
No more than two fees will be added to each order you have made. The fees will also be capped at 25% of what you have spent.
There also appears to be research and a mindset behind this idea, aside from making more money.
The UK Karna boss has been quoted as saying: “Not charging fees feels consumer-friendly, but we’re worried it drives the wrong behaviour. Our data now shows that a total absence of late fees actually leads to less favourable outcomes for customers: with less reason to pay on time, customers are more likely to miss a payment.”
In other countries where Klarna is accepted, such as the Netherlands and Belgium, the introduction of Klarna late payment fees have seen an improvement in on-time payments by around 20%. YouGov survey results show that 75% of responders said that a late payment fee would mean they’d be more likely to pay on time.
Final Thoughts
Klanrna user, or non-Klarna user, this is important because we need to know what is happening financially in the world around us. It is so easy to turn to a BNPL payment method such as Klarna. However, if you don’t know about late payment fees, you can find yourself owing even more. Remember, missing payments can impact your credit score and how much you are likely to be able to borrow in the future.
