(Bloomberg) — Monzo Bank is planning to launch a “buy now pay later” service, entering the growing online market for short-term consumer loans, according to a person familiar with the matter.
The British digital bank will use credit and affordability assessments to decide credit limits, the person said.
The news was reported earlier by the Evening Standard newspaper, which said an announcement was expected as soon as next week.
Buy now pay later services compete with credit cards and payday loans by offering consumers the ability to spread the cost of purchases over several months. British fintech Revolut is also looking to expand into the field, the Standard has reported, joining global firms including Paypal Holdings Inc., Afterpay Ltd and Clearpay.
Read more: Millennials and Gen Z Are Hooked on a $46 Billion Shopping App
Klarna Bank AB, the shopping app backed by Snoop Dogg and built around short-term credit, attracted a valuation of $45.6 billion in a recent funding round — making it one of the world’s most valuable fintech startups.
The U.K. regulator said in February it would begin regulating buy-now pay-later products after their use nearly quadrupled in 2020 to reach 2.7 billion pounds ($3.7 billion).
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