atWest plans to enter the buy now, pay later (BNPL) marketplace, allowing customers to split their purchases into multiple redemptions starting this summer.
BNPL options often appear at online checkouts and can help people avoid paying interest on their loan.
NatWest said its new proposition will give its customers the ability to make a purchase almost anywhere Mastercard is accepted.
The bank said it would put guarantees in place to ensure the loans are affordable.
There’s a clear demand to buy now, pay later and we’re determined to make it better and safer.
Certain categories of expenses, such as games of chance, cash advances and balance transfers, will be excluded.
The new proposal will offer clear and structured repayments, credit scoring and affordability checks, NatWest said.
It will offer a fixed credit limit that the customer will know in advance.
People will be able to track their payments and see how much they owe through NatWest’s mobile app.
The BNPL sector has grown rapidly in recent years, sparking fears that some people could quickly rack up debt that they cannot afford to repay.
Barclays recently published research which found that almost a quarter (24%) of BNPL users are worried about their ability to pay off these bills.
The Woolard review previously found that the use of buy now, pay later products nearly quadrupled in 2020, to £2.7 billion.
The UK government plans to change the law to bring some forms of unregulated buy now, pay later products into the Financial Conduct Authority (FCA) regulations.
Giving people choice in how they pay is at the heart of what we do, so we work closely with NatWest Group to give customers greater flexibility and control over how and where they pay. their purchases.
David Lindberg, CEO of NatWest Retail Banking, said: “There is a clear demand for buy now, pay later and we are committed to making it better and safer.
“We have listened to our customers and are delighted to provide them with a proposal that gives them greater flexibility in managing their finances.
“Customers have told us they appreciate the purchase fraud protection and the helpful tools and reminders to help them budget. They also appreciate the convenience of managing purchases now, paying for purchases later with their other NatWest accounts in our award-winning app. »
Kelly Devine, President of Mastercard UK & Ireland Division, said: “Giving people choice in how they pay is at the heart of what we do, so we are working closely with NatWest Group to give customers greater flexibility and control over how they pay and where they shop.
“Buy now, pay later has become a popular way to spread the cost of a purchase and with NatWest, we are co-creating a solution that benefits from Mastercard’s reach as well as our trusted consumer relationships.”
NatWest said it introduced several features on its app to help improve customers’ financial capability, including a free “know my credit score” feature and “roundups” that automatically place small amounts of money when people spend. in their savings.