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Monzo has become the latest challenger bank to enter the buy now, pay later (BNPL) space with its new service Flex.
Senior Journalist, covering the Credit Strategy and Turnaround, Restructuring & Insolvency News brands.
Flex allows customers to spread the cost of a purchase over three months interest free for products over £30, or over six or 12 months at 19% APR.
It will also offer consumers the opportunity of choosing Flex transactions for purchases made up to two weeks prior. The service’s maximum credit limit has been set at £3,000.
Monzo follows in the footsteps of Nordic-based challenger bank Lunar, which introduced its service in December 2020, and Revolut - which announced plans to launch its BNPL feature earlier this month.
Speaking to the Evening Standard, at the time, Revolut chief executive Nikolay Storonsky said his company was working on a checkout feature which will let its customers automatically spread the cost of any purchase made using its cards.
He added: “Simply a button which you switch on and then your card becomes a buy now, pay later product. Instead of paying upfront everything, you pay a third and then in two weeks’ time we charge you a third and then another third.”
BNPL services are becoming increasingly popular with younger consumers, a demographic that’s also traditionally attracted to challenger banks. In July, research conducted by money.co.uk found that consumers aged 18 to 24 are more likely to use BNPL schemes (54%) than a credit card (49%).
It came after the news that BNPL schemes are set to exceed 1.5 billion transactions by 2026. The research also found that 19% of shoppers admit BNPL is a way to “buy now, worry later”.
Additionally, money.co.uk research - which consisted of a survey of 2,016 consumers aged between 18 and 55 - discovered that 16% believe BNPL schemes led them to purchase more than they could afford.
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