Amazon UK said on Friday it was launching a new product in partnership with the bank called Instalments. The payment method will allow Amazon customers to spread the cost of certain purchases over several instalments between 3 and 48 months after purchase.
Amazon and Barclays first launched the product in Germany last year but today’s deal represents Amazon’s first foray in Britain into the “buy now, pay later” (BNPL) market, which was pioneered by Swedish giant Klarna.
BNPL lets customers defer payments until a future date or spread them over instalments. BNPL has become a popular alternative to credit cards for young shoppers online. Over 5 million people have used the payment method in the UK since the start of the pandemic, according to official estimates.
Rob Levy of Amazon UK said: “Every day we strive to innovate on behalf of our UK customers. Instalments is one way we will offer customers flexible options, enabling them to choose to pay now or split the cost of larger purchases into budget-friendly monthly instalments.
“This is a simple and transparent service from Barclays that automates monthly payments, providing greater comfort for customers making bigger purchases.”
Instalments will cover millions of products on Amazon but will only apply to purchases over £100. Once users apply and approved they will be able to reuse the credit account without having to reapply, much like a credit card.
Unlike many other BNPL providers such as Klarna, Barclays will charge interest on lending under the instalments product. The bank will charge an annual rate of 10.9%.
Ruchir Rodrigues at Barclays said: “This is another major step in our ambition to reinvent payments at the point-of-sale and delight customers. Amazon offers a world-class shopping experience, and this new service gives users a fully reusable payment-by-instalments option, which they can use to spread the cost of purchases over a longer period.”
Barclays then CEO Jes Staley first announced plans to extend the Amazon partnership to Britain in April, saying BNPL was a “fast growing market” for the bank.
While popular with shoppers and retailers alike, the UK’s Financial Conduct Authority has raised concerns about BNPL. The watchdog said the payment method could act as a debt trap and called for “urgent” regulation of the space at the start of this year.