The Swedish bank and payments firm, which has been on a major cost cutting and profitability push in the past 12 months, will begin charging a £5 fee to customers that miss payments from the 16th March,

CityA.M. reports

. Fees will be capped at 25 per cent of the order value with no more than two fees per order, Klarna said.

Writing in City A.M., Klarna’s UK boss Alex Marsh said the firm was concerned its no-fee approach was encouraging irresponsible spending on the platform.

“Not charging fees feels consumer-friendly, but we’re worried it drives the wrong behaviour,” he wrote. “Our data now shows that a total absence of late fees actually leads to less favorable outcomes for customers: with less reason to pay on time, customers are more likely to miss a payment.”

Shoppers will be given a seven day grace period and a number of nudges before being hit with a fee, Klarna said. The firm already charges late fees across a number of markets and said that penalising tardy shoppers in the Netherlands and Belgium had improved on-time payments by 20 per cent.

A portion of the late fees will be channeled into paying off debts for customers who have landed themselves in deeper arrears, Marsh said. A new “Customer Recovery Programme” from the firm will offer shoppers financial support to pay off debts and “tools to stay on top of payments”.

A number of the major BNPL players already charge late fees in the UK, with both Laybuy and Clearpay charging a £6 late fee to shoppers.