The Dutch government reportedly wants to stop the rollout of buy now, pay later (BNPL) in the country’s brick-and-mortar retail stores.
Finance Minister Eelco Heinen said in a letter to parliament that the payment method poses financial risks to consumers, Reuters reported Wednesday (Jan. 22).
While European Union (EU) regulations prevent an outright ban, the Dutch government urged BNPL provider Klarna to stop expanding its offering of the payment method in physical stores in the country, the letter said.
A Klarna spokesperson told Reuters, per the report: “Any discussion about limiting BNPL must also tackle the risks of more harmful credit options like credit cards … In the Netherlands, 99.4% of Klarna loans are repaid in full, showing Dutch consumers’ responsible use of our products.”
A survey by PYMNTS Intelligence found that 2.1% of Dutch consumers said BNPL was the payment method they used in their last online purchase.
The survey found that 38.5% of Dutch consumers used bank transfers or like variants, 35.2% used a card-based variant and 22.9% used a mobile wallet in their last online purchase, according to the PYMNTS Intelligence report, “How the World Does Digital.”
BNPL has faced regulatory challenges in other countries as well.
In the U.S., the Consumer Financial Protection Bureau signaled that there may be new rules in the making for BNPL lenders, in response to a petition from consumer groups to increase oversight on loans extended by non-banking companies.
In the U.K., the Financial Conduct Authority is putting together rules that are set to go into effect next year. The new rules require BNPL providers to make sure customers can afford repayment before offering a loan; to issue “clear, simple and accessible” information about loan agreements in advance; and to offer refunds if consumers run into problems with the products they purchase.
While conventional wisdom says BNPL options are best suited for lower- to middle-income consumers, a third of higher-income consumers have used the payment method, according to the PYMNTS Intelligence report, “New Data: Defining the New Buy Now, Pay Later Consumer.”
The report found that about two-thirds of users said cash flow management is one of the key benefits of BNPL.