Monzo is set to enter the Buy Now, Pay Later (BNPL) market, according to sources reported by the Evening Standard.

The official announcement could potentially come within the next week according to the sources.

The news comes after rival challenger bank Revolut announced last week it was set to offer BNPL services to its 16 million customers.

Monzo’s BNPL service will reportedly include affordability checks for consumers according to the sources, that will see the bank share consumers' details with credit agencies.

Monzo and Revolut are not the only financial services firms to recently make an entrance to the BNPL market; last week payments giant PayPal announced its plans to acquire Japanese BNPL venture Paidy in a $2.7 billion deal.

BNPL is particularly popular with Gen Z and Millennial shoppers; 57 per cent said it was a “smarter way to shop” and 37 per cent said it gave them “more control of their finances” according to research commissioned by PayPal.

However the BNPL industry has also recently come under scrutiny, with recent research from Citizens Advice revealing that one in eight – or 12 per cent – of consumers between 18 and 34 have been chased by debt collectors after using BNPL services.

Monzo was valued at £1.25 billion in its most recent Series G funding round in February 2021, a fall from its peak valuation of £2 billion.

In March, Monzo had 5 million customers according to data collected by Apptopia, accounting for over 38 per cent of monthly active users in the fast-growing digital banking app market.

In May 2020, Tom Blomfield stepped down as chief executive to move into the newly created role of president before leaving the company entirely in January 2021.

In February 2021, the Financial Conduct Authority (FCA) said it planned to regulate the BNPL market with new rules, which would force providers to carry out affordability checks.

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