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Monzo becomes first major bank to launch buy now pay later scheme – here’s how it stacks up

Monzo has become the first major bank to launch its own buy now, pay later (BNPL) scheme. The bank's 'Flex' service enables its current account customers to make interest-free repayments in three instalments over three months on purchases worth between £30 and £3,000. But interest of 19% APR will be charged if you need to repay in more than three instalments. Here's what you need to know. 

Of course, do read our Buy Now, Pay Later guide before using these services, including Monzo's, as while it's a cheap, it's still a debt and there may be better ways for you to borrow - see our Best Ways to Borrow article for more. You can also see our Debt Help guide if you're struggling. 

How Monzo's 'Flex' BNPL scheme works

The key features of Flex, which is available via the Monzo app for both its standard and premium current account holders only, are as follows:

  • You can choose which online and in-store purchases you’d like to ‘Flex'. You can make this choice either at the time of the transaction or up to 14 days after purchase. In the latter scenario, you'll be refunded what you've paid and a repayment plan will instead be set-up. Once you have been refunded, Monzo will take the first instalment of your repayments right away.

  • Flex can be used to pay for most transactions worth between £30 and £3,000. There are, however, some exclusions, such as payments towards credit card bills. 

  • The maximum you can borrow, in total, across all transactions is £3,000. Your exact credit limit will be determined by an affordability and eligibility assessment, so not everyone will be entitled to the full £3,000.  

  • Repayments towards Flex purchases are made once a month. You must make an initial repayment at purchase, and then select how many more instalments you want to repay over. The options, including the initial repayment, are three instalments, six instalments, and 12 instalments. You can, however, overpay or repay in full at any point without a fee. 

  • It's interest-free if you repay in three instalments. BUT if you need longer, you'll be charged 19% APR interest on the outstanding debt. So if, for example, you agree to repay in three instalments but then decide you want to extend to six repayments, Monzo will charge interest on the amount that is left to pay at this time. So, if you owe £90 and you've repaid £60 already, the 19% APR will apply to the remaining £30. 

  • If you choose instalments of six or 12 repayments from the get-go, you'll be charged 19% APR interest on the ENTIRE balance after the first repayment. For example, if you make a purchase of £500 that you Flex over six instalments, the first instalment, which would be £83.30 (£500 divided by six) will be paid right away and will be interest-free. But Monzo will then add 19% APR to the remaining balance (£416.70).

The Flex service will be linked to your debit card but Monzo is also launching a virtual card in the coming weeks for standard and and paid-for current account customers to use alongside Flex too. Flex may also open up to non-Monzo current account holders in future. See Monzo's website for Flex's full Ts&Cs. 

Be warned that successful Flex applications will appear on your credit file

When applying to set-up Flex, Monzo will run a soft search on your credit file. This is not visible to other lenders and does not impact your score. If you're rejected for Flex, this will not appear on your credit file. If you apply for Flex but are rejected, you must wait at least seven days before applying again.

However, Monzo will leave a hard search on your file if you successfully take out Flex, which lets other lenders see a credit product has been taken out. Each month, Monzo will also report your credit limit and current outstanding balance to a Credit Reference Agency (CRA), so that other lenders have visibility over how you are using the service. The big CRAs include Experian, Equifax and TransUnion.

This could impact your credit score if you don't make repayments on time. See below for more on missed Flex repayments, and read our Credit Score guide for further info on how this works.  

You won't be charged fees for missed repayments - but these will be reported on your credit file

If you miss a repayment you've agreed to you won't be charged interest or late payment fees (although interest of 19% does apply if you take longer than three instalments to repay). Monzo will, however, report missed repayments to CRAs. Monzo says it will always remind customers the day before a Flex payment is due. 
For those who miss a repayment, you'll be given seven days to repay. Monzo will also freeze the use of Flex in the meantime so you cannot get into further debt. If, after seven days, you've not repaid the instalment you'll be moved onto a plan to make minimum repayments. If you then still fail to make minimum repayments Monzo will work with you to create a different repayment plan - but Monzo will report this to CRAs. 

If your debt is passed on to a CRA, your credit score is likely to be affected, which may harm your ability to take out more credit in future. For more information on this, see our Credit Scores guide.

You can take complaints to the Ombudsman and use Chargeback - but S75 protection isn't available for now

Unlike other BNPL services, you can take complaints about Monzo's Flex service to the free Financial Ombudsman Service as the bank is regulated by the Financial Conduct Authority (FCA). Other BNPL services are due to be regulated by the FCA but this hasn't come into force yet, which means if something goes wrong with those providers, you can't currently take your complaint to the Ombudsman. 

In addition, any goods or services paid for via Flex can be disputed via Chargeback if you don't get what you paid for and the retailer or service provider itself won't provide a full refund. See our Visa, Mastercard and Amex Chargeback guide for more info on how this customer service guarantee works. 

You can't, however, ask for a refund under Section 75 of the Consumer Credit Act for goods or services purchased using Flex. Monzo says Section 75 protection will only be available for those using its yet to be launched virtual card (which isn't a credit card), rather than its existing physical debit card. For more information on this protection works, check out our guide on Section 75 Refunds.

How does Flex compare to other major BNPL schemes?

The key differences between Monzo's Flex and other BNPL schemes are as follows:

How does Flex compare to other major BNPL schemes?


Provider Can I use Chargeback? Can I use Section 75? Can I go to the Financial Ombudsman Service? How many instalments must I repay over? Frequency of instalments
Clearpay Pay in 4 Yes (1) No No (3) 4 At purchase, then every two weeks
Klarna Pay in 3 Yes (1) No  No (3) 3 At purchase, then every 30 days
Laybuy Pay in 6 Yes (1) No No 6 At purchase, then weekly
Monzo Flex Yes No (2) Yes 3, 6 or 12 At purchase, then every month over either 3, 6 or 12mths
PayPal - Pay in 3 Yes (1) No No (3) 3 At purchase, then monthly

1. A Chargeback dispute is normally issued with your card provider, rather than your BNPL provider. 2. Purchases made with the Flex virtual card, once launched, will be eligible for Section 75. 3. Once BNPL becomes FCA-regulated, users WILL be able to complain to the Ombudsman.

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