BNPL surges during cost of living crisis to 13.5 million UK users

More than one quarter of UK consumers are turning to Buy Now Pay Later (BNPL) schemes, according to Forbes Advisor, which researched consumer behaviour and attitudes towards BNPL service, as prices continue to rise.

The report shows that 70% of BNPL shoppers are using these services more than ever, as a result of the cost of living crisis.

BNPL shoppers aged 18-24 have been the most reliant on these payment methods, with four in five (80%) increasing their spend in the last six months. Those aged 25-34 have upped their spending through these services the second most, with three quarters (75%) using them more regularly.

Why are people turning to Buy Now Pay Later?

The greatest BNPL appeal is the ability to split purchases into manageable payments (38%), followed by the benefit of transparent costs and 0% interest charges (33%). Findings further uncovered that people are taking advantage of these services, to spend beyond their means.

Almost one third (32%) are using BNPL to make payments outside their budget and over one quarter (26%) are using these schemes as an alternative to a credit card, after being rejected.

Almost two in five (39%) Gen Z users (those aged 18-24) claim to be using BNPL to keep up with fashion trends. Moreover, over a third (38%) insist that BNPL services act as an alternative method to purchase items when cash is a struggle (38%). Alongside this, more than one in three (38%) favour the ability to break up the cost of purchases into manageable payments.

What is the most common BNPL purchase?

Electronics are the most common items to be bought using BNPL services, with almost a third (31%) of users making a purchase in this way over the last six months. Nearly a quarter are purchasing luxury items such as designer clothing, jewellery and handbags (24%). Additionally, high street fashion, beauty and lifestyle brands are popular categories among these payment methods.

More than one in six (17%) have used BNPL to purchase takeaways. With takeaway services increasingly partnering with supermarkets, the study indicates that people could start turning to BNPL for their everyday essentials more often.

How are UK consumers managing their repayments?

Research uncovered that consumers are regularly failing to pay back their debt within a couple months of their purchases. Almost one quarter of BNPL users (24%) are missing payments monthly and more than one in four (27%) are skipping them at least every few months

Further findings revealed that young people are struggling to keep up with repayments the most. Almost two in five people aged 18 to 24 are missing out on payments monthly (41%) and over one quarter are skipping them at least every few months (26%).

How much are Buy Now Pay Later shoppers spending?

Brits are falling into an additional £160 worth of debt monthly as a result of Buy Now Pay Later services.

Those aged 18-24 are the biggest spenders of BNPL, with spending reaching over £200 monthly. Young people have been the key target market consistently, with adverts encouraging users to spend on popular fashion and lifestyle brands. Almost half of people aged 18-24 (49%) claimed to be targeted on social media when questions about exposure to BNPL adverts.

“The attraction of BNPL is obvious – it brings products within reach for people who cannot afford the ticket price up front and who perhaps do not have access to other forms of credit,” says Laura Howard, Deputy Editor at Forbes Advisor.

“But the lure of being able to buy something immediately should not tempt people into a financial arrangement that they cannot manage or afford. If you’re late with your payments there’s the prospect of fees, and you could end up staining your credit file, making it harder to secure financial products at a later date.

“The government and financial regulator have already already criticised some BNPL marketing activity as irresponsible, and we can expect tougher regulation of the market in 2023.”

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