Major UK bank reveals plans to launch buy now pay later within months

ANOTHER major UK bank has revealed it’s plans to launch a buy now pay, later service for customers.

NatWest is planning on rolling out the service from this summer, following HSBC and other banks in offering the payment option.

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Buy now, pay later options let customers pay for their shopping in interest-free monthly instalments to spread the cost.

The service lets you buy things now and pay for them at a later date, usually within 30 days.

But shoppers have previously been warned that shoppers can fall too easily into debt by using these services.

NatWest’s new Buy Now, Pay Later scheme can be used almost anywhere that accepts Mastercard.

The bank has said it will put safeguards in place, which includes: excluding certain spending categories, such as gambling, as well as getting rid of cash advances and balance transfers too.

It’s also set to offer a fixed credit limit which the customer will know in advance.

We’ve asked NatWest what this limit is and we will update you as soon as we know more.

People will be able to keep track of payments and see how much they owe through NatWest’s mobile app.

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Transactions will also be covered by all the protections customers expect from a fully regulated bank.

David Lindberg, CEO retail banking NatWest, said: “There’s a clear demand for buy now, pay later and we are determined to make it better and safer.

“We have listened to our customers and are excited to provide them with a proposition that gives them greater flexibility to manage their finances.”

But shoppers risk falling into financial difficulty by using the scheme, such as falling into debt, experts have said.

An estimated eight million adults owe money on BNPL purchases, according to recent research.

The Woolard Review found that while the popular schemes give consumers a significant alternative to more expensive credit, it also puts them at risk of getting into debt.

For example, more than one in 10 customers of a major bank using buy now, pay later were already in arrears.

It also found buy now, pay later products nearly quadrupled in 2020, amounting to £2.7 billion.

With so much of the buy now, pay later market unregulated, the UK Government plans to change the law to bring some products into Financial Conduct Authority (FCA) regulation.

The purchases are set to appear on credit reports for the first time, meaning lenders will be able to see shoppers’ borrowing.

BNPL also does not currently impact credit scores, unless you miss repayments, and debts can also be passed on to debt collection agencies.

But that will change as TransUnion will start including the borrowing on credit reports later this year.

We’ve asked NatWest if its payments will appear in the same way – and we’ll update this story once we know more.

HSBC launched it’s own buy now, pay later option for credit card customers in July last year.

Meanwhile Ikea started offering a new financing option of its own that was closer in style to popular buy now, pay later schemes in May.

This post first appeared on thesun.co.uk