Payments company to offer shoppers ability to pay in full, amid fears that people are racking up unsustainable debts
The Swedish banking and tech firm said consumers would be able to pay immediately rather than spreading payments over several instalments.
It is one of a number of changes Klarna announced on Monday, as BNPL providers face a crackdown from regulators.
Klarna said it aimed to “drive up standards” in the payments industry by carrying out stronger credit and affordability checks.
MPs and regulators are scrutinising BNPL firms which they say have marketed getting into debt to appear harmless.
Klarna’s chief executive Sebastian Siemiatkowski said people should pay with money they already have “most of the time” but that taking out credit sometimes “makes sense”.
“In those cases, our BNPL products offer a sustainable and no cost healthy form of credit – and a much-needed alternative to high-cost credit cards.
“The changes we are announcing today mean that consumers are fully in control of their payments whether they pay now or pay later.”
The pay now option has already existed for some time outside the UK, where the company said it has been popular.
In February, the Treasury unveiled plans for the Financial Conduct Authority (FCA) to oversee BNPL firms.
A review by the FCA found that tougher regulation of the sector was a “as a matter of urgency” amid fears that shoppers could be building up unsustainable debts.
John Glen, the economic secretary to the Treasury, said at the time: “The review found it would be relatively easy to accrue around £1,000 of debt that credit reference agencies and mainstream lenders cannot see.
“With several buy now, pay later providers planning to expand to higher-value retailers, or offer their products in store, the risk that consumers could take on unaffordable levels of debt is increasing.”
Consumer groups have warned that shoppers may not know that they are getting into debt when they use services provided by Klarna and its rivals Clearpay and PayPal.
People who fail to make payments on time can see their credit score negatively impacted.