Challenger bank Monzo is planning to enter the ‘buy now, pay later’ (BPNL) with a new feature on its app.
The digital-only group could release an announcement as soon as next week, the Evening Standard reported.
READ: Monzo under scrutiny over money laundering controls as losses rise again
The news comes days after it was revealed that competitor Revolut was also preparing a BPNL option, to be trialled in some of its European markets next year.
“Simply a button which you switch on and then your card becomes a buy now pay later product,” chief executive Nikolay Storonsky told the Standard.
“Instead of paying upfront everything, you pay a third and then in two weeks time we charge you a third and then another third.”
That’s exactly the principle of BNPL, a practice that has become controversial as consumers risk racking up debt by buying items they can’t afford.
Last week, a report from the Citizens Advice Bureaux (CAB) revealed that 10% of UK shoppers who use these schemes are being pursued by debt collectors.
The hire purchase option is often offered on the checkout page of online shops and the CAB is concerned that none of the leading retailers’ online shops warns shoppers that debt collectors could be called in if the purchasers miss payments.
According to the CAB’s survey, 96% of those who had been referred to debt collectors reported negative consequences, such as sleepless nights or deteriorating mental health, from the consensus.
The government said back in February that it would look into interest-free buy now, pay later schemes, since when there have been no new developments.