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Booming BNPL industry is still at "inception stage," says UK boss of Klarna

Alex Marsh, head of Klarna, UK was speaking on a panel with Paul Harrald, head of Curve Credit, discussing the rise of the BNPL industry and potential obstacles to growth.

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The UK boss of Buy Now Pay Later (BNPL) giant Klarna says the industry is still at its “inception stage”, despite BNPL being the fastest-growing payment method in the UK for the past two years.

Speaking at the AltFi Festival of Finance, Alex Marsh, head of Klarna UK, pointed out the roughly just one per cent of consumer credit was transacted through BNPL.

“This is still at a kind of inception stage really, albeit we see 15m UK consumers have used Klarna. There is so much scope in terms of, kind of, growth in popularity."

Using a ‘buy-now-pay-later’ (BNPL) service is the fastest-growing payment method in the UK for the past two years running, research from Worldpay said.

But the BNPL sector is at a crucial juncture, with soaring demand for its services but Klarna and other BNPL fintechs have been under the microscope as of late as more people join the call for tighter regulation in the sector.

The Swedish buy-now-pay-later firm became Europe’s most valuable startup in March this year. Its latest funding round of $639m was announced on June 10, giving Klarna a valuation of $45.6bn.

Speaking alongside Marsh was Paul Harrald, head of Curve Credit, which offers credit on purchase made with a Curve card to be paid back in time in instalments.

Harrald said that any regulation coming in, may affect current business models of the BNPL sector.

He said: “There is one area where the business model might get challenged and that is if regulation demands, just for one example, that more work must be done in the name of affordability. Then that will affect, I think, either acceptance rates or the cost of Buy Now Pay Later loans.”

Marsh and Harrald gave a thumbs up to the virtues of Open Banking in bolstering the BNPL offering, but Marsh questioned customers willingness to share their financial information with commercial financial institutions.

Harrald said Open Banking would substantiate its position as a responsible lender.

Harrald said: “We’ve decided that Open Bank will feature almost exclusively in all of the lending that we do.

“We want to be absolutely convinced that a customer who for example takes out multiple loans with us can comfortably afford to repay the loans."

Curve Credit has inked in an Open Banking partnership with Credit Kudos.

He said Curve Credit was also looking at a feature, which would help borrowers monitor their own financial behaviour within the Curve app.

Marsh said: “Open Banking can be a really good way to have better data and better insights to inform areas like affordability.”

But Marsh added that the “conceptual barrier” of consumer’s willingness to allow financial institutions to access their financial information needed to be overcome.

“Particularly if it is lower value transactions and they are thinking ‘do I want to share my information for a £50 transaction?’ for example," he added.

The key is to find the “tipping point” where consumers are willing to share information," Marsh added.

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Alex Marsh

Head of Klarna UK

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Paul Harrald

Head of Curve Credit


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