Buy Now Pay Later use up 58%, amid expert concern

Frequent users of buy now, pay later (BNPL) services are likely to experience financial trouble, finds a study, which comes amid a rise in its popularity and the number of services available during a period of high prices. 

Why buy now pay later matters

While not a new financial technology, BNPL is increasingly popular, according to the same Financial Conduct Authority survey that registered the financial vulnerability of many users. Regulation is a matter for governments rather than brands, but with big tech players such as Apple joining fintech firms like PayPal and Klarna in the space, it’s worth noting how this form of credit is affecting people. 

Excessive use of BNP, however, is similar to other instances of overusing lines of credit. For retailers – and agencies, given the increasingly blurred line between advertising and selling – interacting with the technology can help smooth higher-value sales. Compared to last year, it appears that the technology is gaining significant popularity. 

What’s going on

• 27% of UK adults have used BNPL (in the six months to Jan ‘23), up around 58% from the year before.
• Unfortunately, intensive users of the technology (more than 10 times in a 12-month period) were four times more likely to have missed a bill payment.
• Close to half of frequent users were also found to be using high-interest loans or to have racked up credit card debt. 

“When used appropriately, the product provides valuable benefits,” explained Sheldon Mills, executive director of consumers and competition at the FCA, “but we want to ensure that consumers, particularly those in vulnerable circumstances, have adequate protections and are given sufficient information.”

Further afield

With Apple’s expansion of the technology to its fintech customers, after an apparently successful test last year, the signs that this is set to be a big deal in the world’s largest economy are strong. Klarna, according to Insider, grew the value of payments made in the US through its platform 23% year-on-year in 2023.

But trust is a big issue in finance, and Apple is well positioned to introduce loyal users of its tech products to some of its emerging services, including BNPL.

Sourced from the Financial Conduct Authority, The Verge, WARC, Insider