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Wonga launches online pay service
Loans company Wonga has entered the online payment industry by offering shoppers the option of borrowing cash to fund their web purchases.
The Wonga Paylater service has been launched in partnership with furniture business Cotswold Company, whose customers are given the choice of paying for their goods with an upfront fee of 7% and three equal monthly instalments.
That means that a £100 purchase would incur a one-off charge of £7 followed by three payments of £33.33.
Wonga, whose core loans business has stoked controversy among MPs, is attempting to take on an industry dominated by Visa and PayPal.
The company is in the early stages of developing the Paylater offering and will initially work with a small number of retailers. However, the Sunday Times said that founder Errol Damelin was in discussions with some of Britain's biggest online retailers over the product.
Wonga and other players in the sector have been branded "legal loan sharks" by Labour MP Stella Creasy.
The company has been criticised for an annual percentage rate (APR) of more than 4,000% but argues that this figure is misleading because credit is extended for a much shorter period of time. It also claims to be meeting demand for short-term loans from people shunned by high street banks.
There have been reports that the London-based company is considering a US stock market flotation that could value the business at more than £1 billion.