The retailer has teamed up with Clearpay to offer customers the option of paying for orders of more than £30 in interest-free instalments.
The Australian firm and its better known rival Klarna are among a wave of fintech companies being embraced by millennials on tight budgets. Many of M&S’s rivals, including H&M and Asos, already offer delayed payment services and the struggling business is eager to attract a younger generation of shopper, including families with young children.
M&S said its customers were increasingly looking for ways to spread the cost, particularly of larger purchases. The Clearpay service enables customers to spread the total over four instalments paid back across six weeks. The maximum spend is £800 and does not require a credit application and customers can manage their payments through a phone app.
Unlike traditional high street credit products. these fintech firms typically make money by earning commission on the sales transaction itself rather than charging shoppers interest, although some also offer interest-bearing products. Shoppers using the plans typically spend more, more often, making it an attractive proposition for a retailer such as M&S where clothing sales are in decline.
More than 4,000 UK retailers, including Asos, JD Sports and Boohoo, work with Klarna which says it is more than 3m British customers. Clearpay, which only launched in the UK three months ago, says it had gained more than 200,000 active customers in the first 15 weeks of trading.
Not everyone is a fan, though. Simon Wolfson, the chief executive of retailer Next, suggests that this form of credit might be dangerous. “There is a difference between spreading the cost and just deferring it,” he said. “We have a very high bar for new [credit] products and we’re struggling with buy now, pay later.”
Sue Anderson of the debt charity Stepchange said it was possible that these payment plans could encourage people to spend money they so not have. “The services are presented to consumers as a major convenience and an opportunity to ‘try before you buy’,” she said. “But the knock-on consequence can be that people take on credit when they otherwise wouldn’t have.”