More than 2 in 5 (44 per cent) Generation Z shoppers who are using Buy Now Pay Later (BNPL) services feel ‘overwhelmed’ by repayments, according to research from Barclays Partner Finance.

The survey of 2,000 BNPL users across the UK found that Gen Z consumers (those aged between 18-24 years old) who use BNPL spend an estimated 20 per cent of their discretionary income on making repayments.

It also found that almost four in 10 (37 per cent) of younger shoppers spent more than they anticipated in the Christmas and January sales using unregulated BNPL loans, compared to one in three (28 per cent) on a national scale.

This spending has left Gen Z BNPL users with an average of £175.50 in monthly repayments, the research suggested.

Of those who have borrowed on BNPL, just under a third (29 per cent) are concerned about their ability to pay back the amount borrowed, with a total of eight per cent saying they have been contacted by debt collectors.

A total of 12 per cent of BNPL users have seen their credit score impacted.

As a result, the research found that half (50 per cent) regret having used unregulated BNPL products because they ended up buying more than they could afford to repay.

The products most commonly bought by Gen Z-ers using BNPL are ‘everyday fashion’ items (35 per cent) and beauty products (26 per cent).

The research also found that 66 per cent of parents are concerned about their adult children’s use of BNPL, while almost half have actively warned their Gen Z children over the impact of the using services.

The UK government has already announced its intention to regulate BNPL products, but there are still discussions around what form the regulation will take.

Antony Stephen, chief executive of Barclays Partner Finance, said: “Rising inflation and energy bills are contributing to the growing cost of living crisis.

"This makes it much harder for consumers, particularly those in financially vulnerable groups, to stay on top of spending, and many are drawn to BNPL as a way to maintain their current lifestyle.

“As things stand, newer BNPL products are not subject to the same regulation as more traditional credit agreements. With many providers, consumers are not even given a detailed affordability assessment, and the credit reference agencies are given no visibility of the loans that are dished out. That’s a problem, because it allows consumers to get into unmanageable and overwhelming levels of debt, an issue that our research shows is hitting Gen Z shoppers particularly hard.”

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