Jan 22 (Reuters) - The Dutch government is seeking to

prevent the rollout of "buy now, pay later" services in physical

retail outlets due to the financial risks they pose for

consumers, according to a letter sent by Finance Minister Eelco

Heinen to parliament on Tuesday.

"Buy now, pay later" (BNPL) schemes surged in popularity for

online purchases since the COVID-19 pandemic and allows

consumers to split payments over time into smaller,

interest-free installments.

These loans are often provided by digital lenders such as

Sweden's Klarna.

Although an outright ban would be "unfeasible" because of EU

regulations, the Dutch government believes that BNPL services

can trigger earlier and larger debts, particularly among younger

consumers, Heinen said in the letter, co-signed with the

Minister for Legal Protection Teun Struycken.

The government urged Klarna to refrain from further

expanding its BNPL services in physical stores in the

Netherlands, according to the letter.

Klarna could not be immediately reached for comment.

Meanwhile, the Dutch government has held discussions with

other BNPL providers, including Zalando and Amazon ( AMZN )

. Unlike Klarna, these companies have not yet signed a

code of conduct requiring them to verify the age of all

customers.

Last September, Dutch payments group Adyen struck

a deal with Klarna to extend their existing partnership to

in-store terminals in Europe, North America and Australia.

However, a spokesperson for Adyen told Reuters on Wednesday

that when Klarna announced its BNPL expansion, it was still in

the pilot phase in some countries and had not been launched in

the Netherlands.