Klarna launches BNPL Credit ‘Opt Out’ tool for users in the UK

By Gloria Methri

Klarna, the global payments network, and shopping destination, has launched a voluntary credit ‘opt out’, an additional tool in the Klarna app to help consumers save time and money. The new feature will help consumers ‘pre-decide’ not to use credit while saving for a specific life event or sticking to a very strict budget.

The feature was initially suggested by Andrew Griffith MP, UK Economic Secretary to the Treasury in a meeting with Sebastian, Klarna’s CEO and co-founder.

“As a leader in responsible credit, we always put our customer’s interests first,” said Sebastian Siemiatkowski, Klarna’s Co-founder, and CEO, “Unlike credit card companies, who push you to put all your purchases on credit, we believe that consumers should only use credit when it makes sense for them. That is why I loved Andrew’s suggestion of a voluntary credit ‘opt out’, so people are in control of their finances.”

Andrew Griffith MP, Economic Secretary to the Treasury, said, “As this government seeks to protect UK borrowers by bringing forward proportionate regulations for Buy-Now-Pay-Later products, I welcome this initiative which shows how a responsible business can use innovation to help protect vulnerable customers.”

To activate the credit ‘opt out’, consumers can enter the ‘settings’ tab in the Klarna app and select, ‘deactivate credit’. Once credit has been deactivated, consumers are taken to a page of resources and support for those dealing with indebtedness and they will no longer be able to use Klarna Pay in 30, Pay in 3, or Financing products. To reactivate credit services, consumers will need to call Klarna’s customer service teams. The opt-out is available in the latest version of the Klarna App.

Klarna lends to those who can afford to repay by conducting strict eligibility checks on each transaction, unlike credit cards, which give a real-time view of a consumer’s financial circumstances. When a customer misses a payment, Klarna will automatically restrict access to credit services to prevent debt building up. All these measures lead to losses that are less than 1%, 30-40% lower than credit card companies.