Use of ‘buy now, pay later’ apps rises in the Netherlands, raising debt concerns

The number of people in the Netherlands using “buy now, pay later” payment apps has climbed rapidly, raising concerns about debt and lack of consumer protections. New research commissioned by ING shows that about one in three Dutch consumers has used this form of deferred payment.

ING surveyed more than 1,500 adults in the country. Many respondents said they appreciate being able to delay payment until after receiving an online purchase. However, Japke Kaastra, head of financial health at ING Nederland, warned that this convenience carries risks. “It can go wrong if people start using it to buy things they actually don’t have the money for,” Kaastra said.

The study found that 10 percent of users rely on buy now, pay later services because they lack sufficient funds at the time of purchase. About one-third admitted they had experienced payment problems. In 11 percent of cases, consumers incurred additional fees for late payment. Three percent were ultimately unable to repay the amount they owed. According to ING, more than three-quarters of those who faced problems with buy now, pay later also borrow money elsewhere.

This payment model has drawn mounting criticism, particularly because many young people use it. An additional problem is that the Dutch Authority for the Financial Markets, the AFM, currently has no power to supervise providers like Klarna.

“The legislation that will better protect consumers will only come into force in a year and a half. There is clearly a need for more consumer protection now,” Kaastra said. “Buy now, pay later sometimes feels too easy. It can lead to overconsumption, loss of oversight and, ultimately, debt.”

Since early this year, the option to defer payment has also become available in some physical stores. The cabinet has called this development undesirable, but Klarna, the market leader, said in February it would not stop offering buy now, pay later at physical points of sale.

Klarna stated it is taking steps toward what it calls “responsible credit.” On Friday, the company announced a new feature in its app that allows users to disable the deferred payment option. “This way, consumers can decide in advance not to use credit, for example when saving for an important occasion or when sticking to a strict budget,” Klarna said.