NatWest Group PLC (LSE:NWG) said it will enter the controversial ‘Buy Now, Pay Later’ (BNPL) sector later this year.
Several BNPL companies have emerged over the last few years, with Klarna and Clearpay the more popular ones.
They offer consumers the opportunity to buy goods, such as clothes or gym supplements, with interest-free repayments spread over instalments or paid in a lump sum a month after the purchase.
Although there is no interest, most providers usually charge a late fee should customers miss a payment.
NatWest said there was “a clear demand” for BNPL, and it was determined “to make it better and safer,” with some products currently unregulated by the Financial Conduct Authority (FCA), according to the Guardian.
The bank said it intends to launch the product this summer but has not provided details on how it will work, other than purchases would be split into several repayments.
The product will “give customers the convenience to make a purchase almost anywhere that accepts Mastercard,” meaning services will be available in-store as well as online.
Customers will be told a credit limit and the service will be managed within the bank’s mobile app.
Monzo launched a similar product last September, as the pandemic saw a boom in this form of credit, particularly among the under 30s and those with tight finances who prefer to make smaller payments over a period of time.
There have been calls for further safeguards so users are aware that they are taking on debt, with the government announcing the sector will be regulated by the FCA, although any rules are unlikely to take effect until 2023.