Monzo applies BNPL’s trendy sparkle to old-fashioned line of credit

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Monzo’s much-advertised Buy Now, Pay Later product appears to be closer to an old-fashioned pre-approved line of credit, giving customers the option of paying off interest-free loans in three installments or incurring a low rate. 19% APR interest on longer payment plans.

Launched today, Monzo Flex carries all of the features of a traditional credit card, providing users with the ability to defer full initial payment for in-store and online purchases within an agreed credit limit, up to to a maximum of £ 3,000.

While Monzo Flex is a far cry from the payment button options provided by the new wave of BNPL gamers like Klarna and Afterpay, the product does include a few cool touches. These include the ability to roll back past purchases and ways to split a transaction, set your own credit limit, and change your payment plan. Rigorous credit checks by Monzo will also show up on the client’s credit score, an advantage over the hidden debt disguised by traditional BNPL companies.

The digital bank now offers early access to Monzo Flex, which requires users to apply for a line of credit in the app and receive a decision within minutes. The line of credit can be used for purchases over £ 30, with Monzo taking the first payment immediately and then monthly until it is paid off.

James Andrews of money.co.uk reflects on the potential impact of launching BNPL’s booming market: “The implementation of affordability assessments and credit checks could have potential repercussions if payments are late or missed; but showing that this is possible also means that other BNPL providers will find it difficult to argue that this kind of transparency is not possible.

“The extent to which current industry giants will feel the impact of ‘Flex’ may be limited. Consumers often turn to BNPL providers because of the convenience of outlets and therefore Monzo should encourage customers and retailers to move away from existing BNPL providers.

“When it comes to whether other regulated banks will follow BNPL’s offerings, it remains to be seen. “

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