NatWest to Close BNPL Offering Amid Industry Shift

Since their meteoric rise in popularity around 2020, buy now, pay later (BNPL) solutions have faced significant challenges, leading to closures and reevaluations across the sector, as outlined in The Fintech Times. The likes of Openpay and Klarna have experienced setbacks, with NatWest now joining the ranks by announcing the closure of its BNPL service, less than two years after its launch. This decision comes amidst concerns about adoption rates and regulatory uncertainties, raising questions about the future of BNPL.

NatWest’s move highlights the struggle of even major UK banks to penetrate the BNPL market effectively. Initially aiming to disrupt the sector for the better, the bank’s withdrawal underscores the ongoing uncertainty surrounding BNPL due to the absence of comprehensive regulatory oversight.

Alastair Douglas, CEO of TotallyMoney, emphasizes that macroeconomic conditions, including high inflation and rising interest rates, have also taken a toll on BNPL providers. This economic backdrop, coupled with intense competition, has made it challenging for firms to sustain profitability.

Frode Berg, managing director of EMEA at Provenir, points out that while BNPL continues to grow, traditional banks are gradually retreating from the space due to market saturation and a preference among younger consumers for established BNPL providers like Klarna.

Jakub Piotrowski, VP of product at Bud Financial, identifies risk management challenges as a significant barrier to BNPL’s success. Limited visibility into customers’ credit profiles and spending habits complicates risk assessment, potentially leading to higher default rates.

John Clark, product manager at takepayments, raises concerns about BNPL’s impact on brand image, particularly regarding transparency about late fees. For retailers, the costs associated with implementing BNPL services further complicate the decision-making process.

As the industry navigates these challenges, it remains to be seen how BNPL will evolve. While some players like Klarna appear resilient, the broader ecosystem faces significant headwinds, necessitating adaptation and innovation to thrive in an increasingly competitive landscape.