Myron Jobson, of Interactive Investor, the fund shop, said: “It sounds like a credit card, and it looks like one too, but crucially from a regulatory perspective, it isn’t one. This card further blurs the line between regulated and unregulated debt.”
A spokesman for Klarna said: “We have been careful not to describe it as a credit card. It is different from a credit card in important ways – including the fact there is never any interest, repayments are linked to a specific purchase, and spending limits are re-evaluated on a daily basis.”
Klarna said it planned to add additional payment options in the future.
The buy now, pay later industry is currently unregulated but the City watchdog, the Financial Conduct Authority, recommended the sector come under its auspices last year. Further details about how this regulation will occur are expected to be announced soon.
Klarna, the biggest firm operating in the sector, conducts “soft” credit checks on its customers and has previously stated it would welcome industry-wide regulation. The firm said if card customers missed payment dates, they would be unable to make any future purchases until any debt was cleared.
Mr Jobson added: “Regulation can’t come soon enough as the increase in the cost-of-living risks even more people turning to BNPL schemes to help tide them over.”
Klarna said it had a waiting list of 400,000 consumers and would begin sending out physical cards this week. Visa did not respond when approached for comment.
