Barclays stops offering instant consumer credit

Barclays will reduce the majority of its PS2.5 Billion consumer lending operation. This provides credit to shoppers at checkouts of a number of high-street retailers.

The bank partners with Halfords, Homebase and Wickes to offer customers instant loans at the point of sale.

There are interest-free and interest bearing options available. In December 2021, Amazon launched a service that was designed to compete with upstarts like Klarna or Clearpay. These companies’ “buy now, pay later” offers have attracted millions of younger shoppers.

 The bank will stop lending to all retailers, except Amazon and Apple, starting March 31st. No new borrowing will be allowed after existing loans have been repaid. According to Barclays Partner Finance’s most recent results, the portfolio was worth PS2.46 Billion at the end June. This compares with a UK credit card book of PS9.9 Billion. According to filings, it earned PS76.7 millions in net interest income for 2021.

Barclays, one the UK’s Big Four high-street lenders, will report its annual results today.

The bank will be closing down its point-of-sale financing business due to the outdated technology it uses. It will also suspend new lending while it designs a replacement. Barclays stated that it would “returnto growing and scaling up our point-of sale business” once the new technology was available, but it didn’t specify when.

According to industry sources, the bank might struggle to sign up new customers when it relaunches. The buy now, pay later market in Britain has become saturated due to fierce competition between traditional lenders and new entrants. According to Finder, a financial research website, there were 19 of these lenders in Britain last year. This figure is in addition to specialist retail finance lenders like Novuna, formerly Hitachi Capital, and Shawbrook Bank.

According to data from UK Finance, one in eight people will use buy-now, pay-later services by 2021. An increasing number of British lenders have withdrawn from the British market due to increased competition and lack of funding for loss-making start-ups. Since March last year, three Australian players — Humm and Openpay — have stopped being active in the UK.

Barclays stated that it has been “providing regulated points-of-sale financing products and services for many decades, and it continues to be a very exciting area for our business”.