A MAJOR high street bank with 18million customers is set to axe a "lifesaving" payment method.
NatWest will no longer offer Buy Now Pay Later (BNPL) from tomorrow.
As first exclusively revealed by The Sun the bank will begin closing BNPL customers' accounts from May 7.
NatWest launched its BNPL product to much fanfare in the summer of 2022.
But it's understood to be ditching it due to a low take-up.
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The payment method allowed customers to pay off purchases with no interest over four monthly instalments.
Customers manage their BNPL plans in the Natwest app.
Since the news was revealed in March, account holders have shared their disappointment at the proposal to axe the service which has been hailed a "lifesaver".
Of course, it's important to bear in mind that BNPL has proved controversial since it became popular, with some customers struggling to keep up with payments.
It's always a good idea to keep on top of your debt and pay it off to avoid it snowballing.
When the bank first announced the product in March 2022, NatWest said there was a "clear demand" for BNPL and that it was determined "to make it safer and better".
It wanted to test whether there was a demand for a product which automatically put every purchase onto an instalment plan, without having to request one.
However, it's understood that options like NatWest's pre-existing "instalment plan" for credit card users have remained more popular.
The original plan can be switched on for up to five eligible transactions, whereas the BNPL offering automatically puts all purchases onto instalment plans.
NatWest's instalment plan allows credit card customers to pay certain purchases back over instalments of three, six, 12 or 24 months.
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Customers can also move the balance of expired 0% balance transfer cards over to one of these instalment plans.
With a credit card, you usually pay off all or part of the outstanding balance each month, including interest.
While the BNPL product was available for all of Natwest's 18million existing customers, it's understood the actual number of people who used it was far smaller.
A spokesperson for Natwest told The Sun: "We are focusing on our core lending products, helping customers spread the cost of their purchases through our credit cards, overdrafts and loans.
"This means our Buy Now, Pay Later proposition will be closing.”
Customers who have active plans have been contacted over the past week to inform them the service will be shutting down.
Their accounts will be closed once their repayment periods come to an end, so customers don't need to do anything, but they can contact Natwest with any concerns.
OTHER OPTIONS
While NatWest's product is closing, several banks offer products that provide a similar service.
Earlier this year, Amex launched its Plan It BNPL scheme in the UK, allowing cardholders to pay for purchases in instalments over three, six or 12 months with no interest.
However, the plan does come with small fees, so it's worth weighing up the fees vs the interest without an instalment plan.
Amex has a calculator on its website where you can compare the Plan It fees vs regular interest fees at americanexpress.com/en-gb/benefits/plan-it/.
Monzo Flex also lets you spread purchases over three monthly payments interest-free. If you need more time, you can extend the repayment period to six or 12 months, but with interest added.
There are also a number of dedicated BNPL providers like Klarna, which offers a "Pay in Three" product, where customers can pay for a purchase in three interest-free monthly payments.
NatWest customers can instead use the bank's instalment plans if they get a credit card.
HSBC has also offered a similar option for credit card customers since July 2021. It allows them to convert a purchase into an interest-free instalment plan.
BNPL REGULATION
The closure of NatWest's product comes after Sun Money revealed in January that the Treasury is delaying plans to regulate the BNPL sector over concerns it will cause some firms to exit the UK market.
Sources in discussions with the Treasury told The Sun at the time that this is a major concern for the government as it doesn't want to restrict the number of BNPL products on offer during a cost of living crisis.
Millions of people use these products every year, although they are not currently regulated by the City watchdog, the FCA, which means customers aren't covered by the same protections as other credit agreements.
For example, customers who use unregulated financial products don't have access to the Financial Ombudsman Service, which settles complaints between consumers and companies.
BNPL products are also not covered by Section 75 protection, where you can claim a refund if something goes wrong like with credit cards.
Plans were announced to regulate BNPL in 2021 but discussions have been dragging along while the government works around how to introduce regulation without putting off both firms and shoppers.
Last year, we revealed Klarna, a major BNPL provider, was closing down its regulated credit product used by around 90,000 customers.
If you can afford to pay off your balance every month, a regular credit card is also a good option.
Having a credit card that you pay off on time can improve your credit score, which helps future lending such as applying for a mortgage or getting another loan.
Meanwhile, we reveal nine money changes affecting your wallet in May – including Universal Credit shake-up, childcare help and a fee hike.
Plus, NatWest has made a huge change to its "de-banking" rules earlier than necessary.
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