Use of BNPL reaches all-time high

More than a quarter of UK shoppers are now regularly using Buy Now, Pay Later (BNPL), new research has found.

According to a study from credit reference agency Equifax, which analysed data from more than 8,700 current accounts and 2,000 consumer interviews, 28 per cent of the adult population made at least one BNPL repayment in October.

This represents a 5 per cent increase in comparison to December of last year, suggesting that 2.6 million more people are using BNPL providers like Klarma, Clearpay, and Paypal in 2021.

However, even though numbers have increased significantly , the total amount repaid by an average user each month has remained stable this year, growing only £5 between December 2020 – £120.35 – and October 2021 – £125.32.

The report revealed that a quarter of 18-35 year-olds buying Christmas presents this year expect to use the flexible payment option to “soften the financial blow.”

Equifax’s research also found that more than 1 in 10 shoppers expect to use BNPL over the festive period, with Black Friday being a major focus this year. 13 per cent of those people expect to use BNPL for at least one of their purchases, more than double the 6 per cent that ended up doing so last year.

Younger people are most likely to use the payment service this Black Friday and Cyber Monday – 27 per cent – while those earning more than £50,000 also more likely to use it – 23 per cent.

“BNPL is not a new concept, it’s been part of the UK’s credit industry for decades, but it has taken on new forms in recent years that has sent its popularity soaring,” said Jayadeep Nair, chief product and marketing officer, Equifax UK. “For switched on shoppers that want to smooth out their spending over the festive period, it can be an incredibly useful budgeting tool, and may soon even help those with thin credit files to build up a healthy credit score.”

Nair added: “However, as useful as BNPL can be, it’s important that shoppers don’t see it as a way to overstretch themselves in the coming weeks. Prices are rising, interest rates are creeping up, and unless wages keep pace, most borrowers will see their finances squeezed over the coming months. The message to shoppers considering using BNPL at the checkout is clear: are you sure you can make the repayments on time? And could you have afforded this purchase without BNPL?”

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