The Dutch government has moved to stop the spread of buy now, pay later services onto the high street, asking Klarna to reconsider its plans to move into physical stores.
In a letter to the Dutch parliament, Finance Minister Eelco Heinen warned that BNPL services, which have become ubiquitous for online purchases, could pose risks to shoppers if they become prevalent in physical stores.
"Although an outright ban would be unfeasible due to EU regulations, we believe it is essential to address the financial risks linked to BNPL, which could exacerbate debt issues for vulnerable groups," says the letter.
In September, Klarna unveiled a deal with Dutch firm Adyen to bring instalment payments to in-store terminals across Europe, North America and Australia. The two firms have since been carrying out pilots.
After being directly referenced by Heinen, Klarna told Reuters: "Any discussion about limiting BNPL must also tackle the risks of more harmful credit options like credit cards. In the Netherlands, 99.4 per cent of Klarna loans are repaid in full, showing Dutch consumers’ responsible use of our products."
The government has also talked to other providers, including Zalando and Amazon, which, unlike Klarna, have not yet signed a code of conduct requiring them to verify customer ages.