Barclays and Klarna have become locked in a row over buy now, pay later as regulators turn the screw on the fast-growing lending sector.
Alex March, the UK head of buy now, pay later (BNPL) pioneer Klarna, on Thursday said it was “mind boggling” for Barclays to be criticising businesses like his while at the same time charging 10pc interest on loans packaged as BNPL.
A senior executive at Barclays responded by telling the Telegraph that Klarna should focus on its own business and customers rather than focusing its efforts on targeting rivals.
Anthony Stephen, chief executive of Barclays Partner Finance, said: “Put us on notice. Challenge us. But follow the rules: protect your customers.
“Don’t have delinquencies or watch your losses climb into the hundreds of millions, and then lay off your workforce, because you’re trying to cut costs.”
Klarna laid off 10pc of its workforce last month, citing the “tumultuous” start to the year, with Russia’s invasion of Ukraine, a steep rise in inflation, and a likely recession on the horizon.
The war of words between the two lenders comes as the Government prepares to hit the BNPL sector with stricter rules, after campaigners and watchdogs alike warned the new form of borrowing risked pushing more people into debt.
Earlier this week the Treasury announced tougher rules for BNPL providers including affordability checks and greater transparency among lenders.
Klarna welcomed the rules but criticised banks, claiming they were packaging high interest loans as BNPL.
In a partnership with the debt charity StepChange, Barclays published research on Thursday that claimed 876,000 people were at risk of incurring “unmanageable debt” this year if retailers did not act to demand more responsible lending from unregulated BNPL providers.
Klarna, which has doubled the number of UK retailers it works with to 22,000 over the past 18 months, called the conclusion “very shaky” and “highly patronising”. Mr Marsh accused Barclays of sugarcoating the lending terms of their own BNPL product line.
“It is mind-boggling and frankly irresponsible in a cost of living crisis, that Barclays should use StepChange to endorse their high-cost instalment credit product which charges 10.9pc interest and to lobby against interest-free and manageable BNPL products”, Mr Marsh said.
Barclays said Klarna was only focusing on its relationship with Amazon, which charges 10.9pc and around 95pc of Barclays’ BNPL loans, through 35 retailers, are offered at zero interest.