Klarna to introduce late fees in the UK

Buy now, pay later giant Klarna will start charging UK customers for late payments from March 2023.

Shoppers who pay later with Klarna and miss a repayment will be charged £5 from 16 March 2023, in a major change for the buy now, pay later (BNPL) giant.

The Swedish-based fintech has, up until now, been one of several major BNPL providers which don’t charge late fees in the UK.

The new charges were announced days before Klarna’s reported loss of $1 billion (around £0.84 billion) for 2022.

How will the new fees work?

• The fee will be charged after a 7-day grace period. If you miss a repayment, you’ll get a week to pay it. Klarna will also send 4 reminders about your payment before charging you a fee.
• Late payment fee will be up to £5. The standard £5 fee will apply to orders of £20 or more. If your order is under £20, the fee will be under £5. The fee’s also capped at 25% of your order.
• Late fees will be waived for those who take a “financial awareness” test. If you take this test – dubbed the “Never Forget” test – any late repayment fees you may be charged will be waived. But the test will be available in the Klarna app only until 27 April, 2023. Klarna says this is a way of using the new fees to “incentivise financial education”.

The company says that the funds collected will be used to support a customer support programme for those struggling with repayments, which it will introduce later this year. Klarna says it will contact customers with long-overdue payments and offer to waive 50% of their balance.

The new fees come after a trial of charging for late payments in other countries, including Sweden and the Netherlands; Klarna says the trial saw on-time repayments increase by 20%.

How do I avoid late payment fees?

If you currently use Klarna’s Pay in 3 service, Klarna already takes your payments automatically from your debit or credit card.

If you use the Pay in 30 feature, which allows you to pay 30 days later, the best way to avoid the new late payment fees is to set up a direct debit.

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