Monzo launches Flex as it joins the buy now, pay later boom: Customers offered credit limits up to £3k and costs can be spread over a year

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Millennial favourite Monzo has today launched its own buy now, pay later product called Flex as it looks to profit from the growing popularity of this form of credit.

The digital bank, which currently has over five million customers and is synonymous with its ‘hot coral’ debit card, will be offering its customers credit limits of up to £3,000 and allow them to spread the cost of purchases over three, six or 12 months.

It is one of the first banks to launch in the sector – one that has been mired in controversy.

The payment type, which allows customers to split the cost of products at the check out, has been popularised largely by Swedish firm Klarna.

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Others such as Clearpay and LayBuy are also available, with some retailers coming under fire for making it the default payment option at checkout online.

There is also concerns about tempting shoppers into taking on unsustainable levels of debt by kicking the problem further down the line. 

Earlier in the year, the Financial Conduct Authority confirmed the industry would be regulated – but this hasn’t happened yet.

How does Flex work?

Flex launched today and customers can sign up through the Monzo website. Those who pass eligibility checks first will also get access to Flex today too. 

Those signing up will be pre-approved credit at checkout, based on affordability and given up to an approved credit limit of £3,000. 

Flex will not charge interest for users who opt to repay over three months, while those spreading costs over 6 or 12 months will be charged 19 per cent annual interest.

It can be used on any transaction over £30 and can be retroactively applied up to two weeks after a purchase is made.

It says customers who miss a repayment will not be charged late fees. They can also pay off items early.

It can be used on online purchases but also in store with the Monzo card and app.

It is also possible to choose to Flex an existing Monzo transaction from the last two weeks.


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Kunal Malani, Monzo’s head of borrowing, said: ‘We know that money stops working for people when debt piles up and becomes a trap – so we’ve listened to customers and designed a better way for them to pay later, which puts them in control.

‘Flex combines Monzo’s technology and banking expertise with its core values, ensuring customers always have visibility and control over their financial lives and only borrow money that they can afford to repay.’ 

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Is this a positive move? 

Some experts believe it is a good move for the industry – and for Monzo. 

David M. Brear, chief executive of the challenger consultancy 11:FS, said: ‘This makes total sense. We have been waiting for Monzo to get into the bit of banking that makes it all worth doing – and that’s lending in all its forms.

‘This news regarding BNPL, together with their launch of loans earlier this week, pushes Monzo beyond just discretionary spending to really helping people with many parts of their increasingly complex finances.’

Others believe the news will benefit younger buyers – many of which gravitate towards this sort of payment. 

Samantha Palmer, Payl8r’s managing director, said: ‘We know that millennials don’t want credit cards and don’t like banks, they prefer to use buy now, pay later as this can help them quickly improve their credit score.

‘Young adults find it hard to get finance because they’ve not had a chance to build their credit rating, despite most of them having the funds to pay back loans in a responsible and timely manner.

‘Some say the buy now, pay later market is becoming saturated. I think it’s the future of millennial finance and Monzo quite rightly don’t want to miss out on a piece of the action.’

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Could this encourage debt? 

However, there are also concerns on the impact it will have on those who may find themselves in debt.

The Treasury announced in February that BNPL would be regulated to better protect spenders.

At the time, Christopher Woolard, former interim chief executive of the Financial Conduct Authority, said it was ‘urgently needed to protect consumers’. 

But seven months on, no plans, timelines or proposals have been announced.

Citizens Advice has previously revealed as many as one in ten BNPL customers has been chased by debt collectors after missing payments.

Its research also suggests that shoppers have been charged as much as £39million in late fees over the past year.

Brear said: ‘My main question would be how Monzo plans to do it. BNPL can be great for customers, but it can also result in people getting into debt without realising what they’re doing.

‘Monzo has always been a customer-led bank and it needs to ensure it delivers this in a way that helps customers, including vulnerable customers, to manage and improve their financial well being. 

‘While these moves are great for customers, they won’t hurt Monzo’s own finances either. I expect to see much happier shareholders and investors when the next set of results come around.’

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