NatWest ends buy now, pay later (BNPL) service after two years

British bank NatWest has decided to discontinue its buy now, pay later (BNPL) service less than two years after its launch due to lower-than-expected uptake. The closure of BNPL accounts will take effect from May as the bank shifts its focus towards its core lending products.

A spokesperson for NatWest stated that the bank is prioritizing its core lending products, such as credit cards, overdrafts, and loans, to assist customers in spreading the cost of their purchases. As such, the decision to shut down the BNPL proposition reflects a strategic refocusing of NatWest’s offerings. The UK government is also considering tightening regulations on BNPL services following recommendations for “urgent” oversight in the sector.

NatWest initially entered the BNPL market in 2022, joining several other banks in expanding into a sector previously dominated by dedicated providers like Klarna and Afterpay. However, despite the rising popularity of BNPL services, NatWest’s BNPL offering did not meet the expected level of adoption.

NatWest has originally planned to become the UK’s first high-street lender to introduce a dedicated BNPL product. Its offering provided customers with the flexibility to defer payments at any merchant accepting Mastercard, incorporating features such as fraud protection, budgeting tools, and reminders within NatWest’s mobile app. Its BNPL transactions also carried the full protections expected from a regulated bank.

The move by NatWest coincides with the delay in the UK government’s plans to implement a new regulatory framework for the BNPL sector. The latter experienced significant growth in recent years, particularly during the COVID-19 pandemic, as consumers sought alternative payment methods and greater flexibility in managing their finances.

Klarna, the largest dedicated BNPL provider, recently expanded its offerings with a physical card for in-store payments, aiming to capture market share from conventional card providers. The Stockholm-based buy-now-pay-later (BNPL) provider is also advancing with plans for a potential U.S. listing, which could become one of the most significant listings of the year. The company is reportedly aiming for a valuation of roughly $20 billion.

Meanwhile, Santander launched its own BNPL product, Zinia, in Germany earlier this year, with plans for broader deployment across its markets.