Virgin Money announces plans to take UK’s fast-growing ‘buy now, pay later market’ by storm
Virgin Money said this afternoon the bank plans to enter the buy now, pay later (BNPL) market later this year.
With an offering called Virgin Money Slyce, Virgin Money is set to launch a new BNPL credit card product. Any spend over £30 can be spread across three, six, nine or 12-month repayment plans.
Paying back in three or six months will be fee-free, but fees will be charged for payments over longer periods, the bank said.
Fees will be charged as a percentage of the total amount a customer puts onto the plan. Nine monthly payments will have a 7.5 per cent fee added and 12 monthly payments will have a 10 per cent fee added. Customers can also build their credit score while using Slyce.
Virgin Money said the product will be fully regulated and it will carry out credit and affordability checks before any spending starts.
Hugh Chater, chief commercial officer at Virgin Money, said: “It’s clear that consumers now expect to be able to pay via buy now, pay later plans.”
BNPL products generally can help people to spread the cost of purchases without adding to their overall cost.
But there have been concerns that it can be relatively easy for people to build up large amounts of debt, which they cannot always easily repay.
More than two in five, recent, buy now pay later (BNPL) customers ended up borrowing money to make their repayments, according to recent research from Citizens Advice.
The UK Government plans to change the law to bring some forms of unregulated BNPL products into Financial Conduct Authority (FCA) regulation.
Klarna previously announced that it would report the use of BNPL products to UK credit reference agencies from June, to protect customers and provide the industry with greater visibility of BNPL use, helping to improve affordability assessments.
In March, another bank, NatWest, said that it planned to enter the BNPL market, enabling customers to split their purchases.