Buy Now, Pay Later has dramatically picked up steam in the last few years, and have permanently changed the ecommerce space.
To ensure the protection of UK customers, the Financial Conduct Authority (FCA) is updating their requirements for websites running a Buy Now, Pay Later campaign, or using payment methods such as Klarna or ClearPay which allow customers to split a payment into monthly instalments.
What do I need to do?
Customers using either Klarna or ClearPay should be aware of their rules around financial promotions and advertising, this can mean how Buy Now, Pay Later is discussed on your website, but also on any marketing, social media or advertising.
Klarna - Financial Promotion Rules
While simply listing these payment options at checkout is no cause for alarm, the key restriction is around having an Invitation to Credit. Klarna defines this as;
"An invitation to credit prompts or encourages a consumer to use a BNPL product"
Klarna - Financial Promotion Rules - January 2024
This could consist of any messaging that makes Buy Now, Pay Later seem like a benefit to the customer such as; “Split your purchases into 3 interest-free payments” or "Why wait until payday?"
If such an invitation is included, then a relevant and pre-determined terms disclosure is required, such as Klarna's example below;
Klarna's Pay in 3 / Pay in 30 days are unregulated credit agreements. Borrowing more than you can afford or paying late may negatively impact your financial status and ability to obtain credit. 18+, UK residents only. Subject to status. Ts&Cs and late fees apply.
To make this a little easier to follow for first time Buy Now, Pay Later merchants, we've put together a quick Do's and Do Not's list;
Do
- Encourage responsible spending
- Let your customers know what payment options are available at checkout
- Keep the wording as neutral as possible - "Klarna available at checkout"
- Use official branding and logos on your website or adverts
- Ensure that the Terms and Conditions of your chosen payment provider are available on your website, either as a link or as part of your terms.
- Ensure any Invitation to Credit includes a relevant Buy Now, Pay Later Disclosure.
Do Not
- Do Not encourage purchases beyond a consumers normal spending habits
- Do Not offer Buy Now Pay Later because a customer does not have the funds to make the purchase upfront
- Do Not target under 18's, those with financial troubles or other vulnerable groups.
- Do Not “bundle” financial promotions from multiple providers such as "Buy Now Pay Later with Klarna and ClearPay
- Do Not amend the terms disclosure to fit your branding or image. The terms belong to the payment provider who are providing the credit, they are the ones authorised by the FCA.
- Do Not hide the terms disclosure as small print - it must be clearly visible text and at least 50% of the size of the invitation to credit
- Do Not use influencers to promote your Buy Now, Pay Later promotion without confirming with the payment platform first
So why not get the pros to take care of it?
When you purchase an ecommerce package from DotGO you have the option to offer both Klarna and ClearPay to your paying customers as part of our shopping basket platform - among other traditional payment providers such as Stripe, PayPal, Google Pay and Apple Pay.
Your dedicated ecommerce designer will work with you to design and build your website, and setup your preferred payment options in checkout.
Why settle for second best?
Get an online shop to be proud of.
Our brilliant team of dedicated designers and content writers work closely with you to determine the precise needs of your online business, keeping you in the loop throughout and producing a stunning ecommerce website that works hard for your business.
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