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Dutch government ministers have asked buy now, pay later (BNPL) providers to refrain from offering their services in physical stores, due to concerns of over-indebtedness among the young and vulnerable.
Last week, finance minister Eelco Heinen and legal protection minister Teun Struycken wrote to parliament on measures that their ministries are taking to temper the growth of BNPL in the Netherlands.
The letter, which was requested by parliament in October last year, makes clear that the new coalition government shares lawmakers’ concerns about the risks of BNPL.
In particular, the government is concerned about the expansion of BNPL to physical stores, referring to this as an “undesirable” development.
“Extending BNPL services to physical stores carries the risk of normalising borrowing, particularly among young and vulnerable consumers,” Heinen and Struycken wrote.
“Representatives of the retail sector have also informed the Cabinet that they are concerned about the broader rollout of BNPL in physical stores.
“They see deferred payment in its current form as a bad development for both the consumer and the retailer, because it is too often part of debt problems.”
In response, the government will enter discussions with the retail sector on initiatives that would aim to “discourage” and “prevent” BNPL in physical stores “as much as possible”.
The government cannot ban BNPL, although this is an option it has considered, so it has called on firms to “urgently” refrain from offering BNPL in physical stores.
“In making this request, the government appeals to the firms’ social responsibility for preventing problematic debts among consumers,” the ministers wrote.
“Because the retail sector itself has also expressed its concerns, the government asks the sector not to offer BNPL in physical stores.”
In a separate letter, as covered by Vixio, Heinen said he is working on a bill that would prevent young people from using BNPL by imposing age verification checks, with “careful” processing of personal data.
Klarna, Adyen put on watch
The ministers also referred to an earlier meeting, which took place in October last year, between the relevant ministries and Klarna and Adyen — who together launched in-store BNPL services one month earlier.
During the meeting, the government raised its concerns, and the two firms were asked to provide safeguards that would protect consumers, particularly young people, from over-indebtedness.
Klarna responded that there is no difference between using BNPL in-store and online. When using Klarna in a physical store, the customer must first scan a QR code, after which they carry out the transaction using the same process as when shopping online.
Moreover, the firm added, the physical retailer is not obliged to offer any BNPL service as a payment option.
Nonetheless, Klarna highlighted that it had included an additional information screen that provides consumer warnings, in line with the recommendations of the Netherlands Authority for the Financial Markets (AFM).
In addition, the provider plans to investigate whether the credit “opt out” feature that it uses in the UK can also be implemented in the Netherlands.
This function allows customers to temporarily disable the option of paying on credit — which, in theory, improves self-control and prevents impulsive over-spending.
Klarna expansion likely to continue
Speaking with Vixio, Klarna said it has “nothing to share” on the Dutch government’s request that it refrains from offering BNPL in physical stores.
However, it did note that it will be meeting with regulators once again to discuss the matter next week.
A Klarna spokesperson also argued that BNPL is a more efficient form of credit that ought to be accessible to Dutch consumers.
"Any discussion about limiting BNPL must also tackle the risks of more harmful credit options like credit cards,” he said.
“BNPL in-store makes returns easy and helps customers manage larger purchases interest-free — an healthier alternative to costly credit cards.”
The spokesperson also noted that, in the Netherlands, 99.4 percent of Klarna loans are repaid in full.
