Over the past year, more than 10 million Brits have bought products or services through a buy now pay later (BNPL) scheme, a new UK survey of consumer attitudes to BNPL by global management and technology consultancy Capco found.
Millennials using BNPL have found themselves at greater risk of debt as more than half of 18 to 34-year-olds have missed a payment and nearly two thirds (62%) said BNPL is making them spend more, according to the survey of 2,000 Brits.
A third (32%) of BNPL users said their usage of such schemes has increased during the coronavirus pandemic.
Brits are confused about how BNPL schemes work, with 44% of respondents unsure whether BNPL means “taking on debt” or “deferring a payment,” the survey found. Among young people aged between 18 and 34 this rose to 57%.
Over half (54%) of Brits think BNPL products should be regulated, while 52% want providers to consider people’s credit history before financing is approved to help protect people from falling into debt.
However, BNPL is gaining popularity in the UK with almost half (46%) of users citing BNPL as their preferred form of credit.
Despite this, credit cards are still the most popular form of credit in the UK, with 74% of respondents using a credit card compared to 56% who had used BNPL.
Mike Ethelston, UK managing partner at Capco, said: “Buy Now Pay Later providers are predicted to double their market share of online purchases within the next three years.
“However, with BNPL coming under increased regulatory scrutiny, plus the ongoing economic fallout of COVID, there are questions to be asked about the future trajectory of BNPL in the UK, and what opportunities exist for established banks to make in-roads in this sector.”
Swedish digital bank Klarna is the most popular BNPL product with young people aged 18 to 34 in the UK, the survey found. PayPal Credit (PYPL) was the most well-known provider across all generations surveyed.
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