Barclays chief executive Jes Staley has claimed that the bank seeks to “take on” buy now pay later (BNPL) giant Klarna.
This will mark Barclays first foray into the controversial market.
The banking giant is also extending a deal with Amazon to provide point-of-sale financing for the ecommerce giant, which is embroiled in a battle with Shopify over sales.
“We need to accelerate the digitalisation of our offerings to compete with people like Klarna and Stripe,” Staley said.
“I also do believe that the regulatory parameter is going to need to widen.
“To give you an example, in the UK, we have to show our regulators and ourselves that when we extend credit to a consumer that that consumer can afford it.”
Barclays already loans to cover purchases on Amazon’s website in Germany however will now provide the service in the UK.
The BNPL sector boomed during the pandemic purchases last year hit £2.7 billion.
Raisin chief executive Kevin Mountford added: “What was once an unfashionable corner of finance is now being popularised by a new breed of online consumers. In recent years, they have been able to reinvent the market bringing it to the e-commerce world.”
“Whilst Klarna is popular with online fashion retailers, such as ASOS, it does have the opportunity and potential to be a huge network covering everything, and with Barclays they will have the platform to grow themselves and expand from the young adult market.
“Whilst it can be of benefit to consumers, it also comes with its dangers. These companies don’t have any obligations to obey.
“With the growth of this market, it could become a real issue for regulators as they continually change the playing field for credit and loans.
“It does have the potential to saddle consumers with debt, which will harm their credit scores.
The financial watchdog is carrying out a review of the sector, so Barclays could be expecting tough new rules by the end of 2022.”