NatWest now plans to enter the Buy, Pay Later (BNPL) market, allowing customers to split their purchases into several refunds this summer.
BNPL options often appear at online cash registers and they can help people avoid paying interest on their loan.
NatWest said its new proposal gives its customers the convenience of making a purchase almost anywhere that accepts Mastercard.
The bank said it would put security measures in place to ensure the credit was payable.
There is a clear demand for buying now, paying later and we are determined to make it better and more secure
David Lindberg, NatWest
Certain spending categories, such as gambling, cash advances and balance transfers are excluded.
The new scheme will initially be made available to NatWest customers at launch, with the expectation it will be rolled out to Royal Bank of Scotland (RBS) and Ulster Bank customers who are part of the same group later this year.
The new proposal will offer clear, structured repayments, credit scores and payoff checks, NatWest said.
It will offer a fixed credit limit that the customer knows in advance.
People can track payments and see how much they owe through NatWest’s mobile app.
The BNPL sector has expanded rapidly in recent years, which causes some people to be able to quickly build up debts that they can not afford to repay.
Barclays recently published research that concerned almost a quarter (24%) of BNPL users about their ability to pay such bills.
The Woolard Review previously found the need to buy now, to pay for products later, almost doubled by 2020, to £ 2.7 billion.
The UK government plans to amend the law to bring some form of unregulated Buy-Now-Pay-Spider products into the Financial Conduct Authority (FCA) regulation.
People choose to bid as they pay is at the heart of what we do, so we work closely with the NatWest Group to give customers more flexibility and control over how they pay and where they shop
Kelly Devine, Mastercard UK and Ireland
David Lindberg, CEO Retail Banking NatWest, said: “There is a clear demand for buying now, paying later and we are committed to making it better and more secure.
“We have listened to our clients and are thrilled to offer them a proposal that gives them more flexibility to manage their finances.
“Customers have told us that they value fraud on purchases and useful tools and reminders to help them budget. They also like the convenience of managing purchases now, paying for later purchases alongside their other NatWest accounts in our award-winning app .
Kelly Devine, Division President for Mastercard UK and Ireland, said: “People offering how they pay is at the heart of what we do, so we work closely with the NatWest Group to give customers more flexibility and control and how they pay and where they shop.
“Buy now, pay later has become a popular means of spreading the cost of a purchase and with NatWest we are creating a solution that benefits from the achievement of Mastercard as well as from our trusting relationships with consumers.”
NatWest said it has introduced several features on its app to improve customers’ financial ability, including a free “Know My Credit Score” feature and “Round Ups” that automatically set small amounts of money when people spend in their savings .
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