PENSIONERS are increasingly being forced to rely on buy-now, pay-later payment options such as Klarna as the cost-of-living crisis makes day-to-day life unaffordable.
Klarna, which customers can use to pay for everything from electrical goods to groceries in installments, has reported that the 60-plus group is its fastest-growing age segment, now accounting for an eighth of its customer base.
There are fears that this growing reliance on such payment options is a slippery slope that could plunge pensioners who are already financially vulnerable into risky territory.
Debt charity StepChange’s Simon Trevethick said: “Reports that people are using buy-now, pay-later to purchase everyday essentials speaks to the level of the cost-of-living crisis and the difficulties people across Britain are facing.
“Our own research has shown a worrying crossover between use of buy-now, pay-later and financial difficulty.”
He said the charity’s polling suggests that people who use buy-now, pay-later schemes are three times more likely to be struggling with severe debt.
Mr Trevethick warns that the payment option is currently unregulated and does not have the same level of statutory consumer protection that traditional lending such as credit cards are subject to. This means customers can take out loans without affordability assessments.
Buy-now, pay-later also sits outside marketing rules, so products can be temptingly advertised at the point of checkout.
Calling for regulation, Mr Trevethick said: “In the midst of a cost-of-living crisis, people need more protection, not less.”
Age UK charity director Caroline Abrahams said: “We know that this year has been extremely tough for older people on low incomes, with millions struggling to keep their heads above water and afford to pay their bills.
“With more older customers — many of whom will be on low incomes — it’s crucial buy-now, pay-later firms are regulated properly and that people are supported to avoid unsustainable debt.”
Jan Shortt from the National Pensioners Convention agreed that lenders such as Klarna need to be robustly regulated.
She said that many feel uncomfortable with sharing money issues, scared that people will think that they are mismanaging their budget.
“They sit and worry, then something might come through the door that offers them a way out,” Ms Shortt said. “Instead of being the last resort, it's the first resort.”
