Revolut is planning to take on Klarna with the launch its own ‘buy now, pay later’ (BNPL) service next year as the controversial sector’s growth shows no signs of slowing down.
Fintech giant Revolut, which became the UK’s most valuable private tech company ever in July following an $800 million funding round, confirmed its BNPL service was in the early stages of development.
According to The Evening Standard, Revolut’s new service will allow its 16 million customers to simply flick a switch, meaning their “card becomes a buy now pay later product”.
“Instead of paying upfront everything, you pay a third and then in two weeks’ time we charge you a third and then another third,” Revolut’s chief executive Nikolay Storonsky told the publication.
It comes just two weeks after Revolut announced plans to launch another credit scheme called PayDay, enabling its users to access a proportion of their paycheck early.
Revolut, now valued at $33 billion, is the latest major company to venture into the booming BNPL space following new that Amazon is working on its own product.
Since the start of the pandemic Paypal, Apple and Ebay have all launched their own versions of the service, while hundreds of leading retailers have signed partnership deals with BNPL specialists like Klarna and Afterpay, recently bought by Jack Dorsey’s Square for $29 billion.
BNPL spending is set to hit nearly a trillion dollars by 2026 despite increasingly strict regulation of the sector, according to figures from Juniper research.
The fresh regulatory crackdown comes as consumer charities continue to publish damning reports into BNPL schemes and their impact on users finances.
Citizens Advice, which surveyed more than 2000 adults who have used a BNPL service in the last 12 months, says that 12 per cent of 18 to 24-year-olds surveyed had been referred to debt collectors.
Over the past year, Citizens Advice estimates that UK shoppers were charged a collective £39 million in late fees.