Dutch government looks to prevent in-store BNPL services

credit: Ivan Marc/Shutterstock
credit: Ivan Marc/Shutterstock

Despite the Buy Now, Pay Later (BNPL) wave continuing its momentum, government officials in the Netherlands are seeking to prevent its introduction at physical retailers. 

According to a letter sent to Parliament by Eelco Heinen, the Dutch Finance Minister, he believes that the roll out of BNPL payment options for in-store purchases will cause harm to consumer finances. 

This is often a hot topic regarding BNPL, as regulators not just in the Netherlands but across the world, come to grips with how to provide sufficient guidelines regarding the loans afforded by the payment method. 

BNPL initially took off in popularity amongst shoppers for online purchases in the advent of the COVID-19 pandemic. It was viewed as a flexible payment option that enabled consumers to pay the total sum across varying time periods; three months, six months, etc.

Klarna, one of the leading BNPL firms, has been at the forefront of this wave but has also been welcoming of regulatory discussions. In a statement sent to Reuters, the Swedish fintech cautioned the Dutch government on its potential ban on in-store BNPL options. 

A Klarna spokesperson said: “Any discussion about limiting BNPL must also tackle the risks of more harmful credit options like credit cards… In the Netherlands, 99.4% of Klarna loans are repaid in full, showing Dutch consumers’ responsible use of our products.”

Within Heinen’s letter, he is concerned regarding the affordability aspect of BNPL loans and whether consumers can actually afford the goods or services they are buying, which could lead to mounting debt, particularly for younger people. 

Despite BNPL’s surge in online usage over the past several years, its presence in-store has yet to meet the same popularity. 

On the regulatory front, the European Directive on Consumer Credit in October 2023 set new guidelines for BNPL providers to comply with. It stated that for credited payments of under €200 must be transparent for split payments to mitigate any potential debt scenarios.

Whilst the Dutch government will now ponder on whether a ban on in-store BNPL transactions will be feasible, it has reportedly told Klarna to scale back from its expansion efforts with retailers. Klarna had agreed a deal with Dutch fintech Adyen to integrate its BNPL services on Adyen terminals in the Netherlands and other regions.