Capital One pushes back against 'risky' buy now pay later space

Capital One has barred customers using its credit cards to clear buy now pay later debt.

The move makes it the first FI to distance itself from a booming space which includes Klarna, Openpay and Afterpay.

The third largest US card firm with 62 million accounts, plus more in Canada and Britain, said it would no longer allow “transactions identified as point of sale loans charged on its credit cards, regardless of the point of sale lender”.

“These kinds of transactions can be risky for customers and the banks that serve them,” it added.

Martin Lewis

Last week, Martin Lewis, the English journalist/TV presenter and founder of MoneySavingExpert.com, hit out at buy now pay later offerings.

I'm very concerned about the growth of Buy Now Pay Later. It's exploding like payday loans did. And like payday loans were, it's a huge credit industry that's unregulated - so few rules, and you can't go to ombudsman.

That must change. Amend the fin services /regulation bill
— Martin Lewis (@MartinSLewis) December 2, 2020

“Some people don't even know they're signing up for it. Yet there are also huge numbers with mental health issues and capacity issues,” he added.

“These schemes encourage people to increase spending - even if not right for them. The key is to regulate it - get rules in and a proper complaint system.”

Whilst many agreed with Lewis, some defended buy now, pay later players.

“It’s not fair to the majority of people who would use this method wisely, we can’t always make decisions to appease the lowest common denominator,” argued @Teessidetommy.

And @JamesNimmo0864 stated: “I’ve always used Argos’ BNPL to my advantage and use them for big purchases and pay it before the due date.”

“Often people think they’re 0% IFC agreements. People just need to read the small print and know what they’re signing up to.”