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Klarna Cuts UK Debt Collections with Late Fees

Klarna Cuts UK Debt Collections with Late Fees

Klarna, the Swedish fintech giant, has seen a significant decrease in the number of British customers being sent to debt collectors following the introduction of late fees for its pay-in-3 buy now, pay later (BNPL) service. From a high of 1.95% two years ago, the figure dropped to 0.84% last year. The implementation of late fees has led to a 55% improvement in on-time payments, according to the company. Despite this, concerns linger about the impact of BNPL services on vulnerable consumers, with a report indicating that 22% of British BNPL users missed payments and faced late fees in the six months leading up to December. The Consumer Financial Protection Bureau in the U.S. is also scrutinizing the industry, particularly the use of personal data to encourage consumer spending. Klarna has responded by launching a web page to share data on its BNPL offerings, aiming to promote transparency and consumer-friendly practices in the financial sector.

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