The BNPL payment industry in UK has recorded strong growth over the last four quarters, supported by increased e-commerce penetration.
UK BNPL market to reach $55 billion
BNPL payments are expected to grow by 20.1% on an annual basis to reach $32.8 billion in 2023.
Medium to long term growth of BNPL in the UK is to remain strong. BNPL payment adoption is expected to grow steadily over the forecast period, recording a CAGR of 10.9% during 2023-2028.
The BNPL Gross Merchandise Value in the country will increase from $27.3 billion in 2022 to reach $55.1 billion by 2028.
With surging cost of living in the UK, more shoppers are turning to BNPL schemes to manage their cash flow. It is estimated over 36% of consumers have used BNPL more than once because of rising inflation and cost of living. Millennials and Gen Z consumers are the ones using the payment method more frequently.
The most popular categories where consumers are using the payment method includes consumer electronics products, such as smartphones, TVs, and computer’s
This is followed by clothing, home improvement and health and wellness products, among others. The growing usage of BNPL schemes, due to the cost of living, is also driving consumer debt in the United Kingdom.
BNPL competition is intense
The competition in the BNPL space has increased significantly over the last two years. To gain a competitive advantage and build brand loyalty, providers are moving beyond flexible payment schemes.
In November 2022, Klarna announced the launch of a search and compare tool within its app for consumers in the UK. The add-on feature allows consumers to look out for the best deals when shopping online.
The launch of the feature builds upon the acquisition of PriceRunner, a comparison-shopping service, which Klarna acquired in April 2022.
Over the last 12 months, Klarna has swiftly moved beyond flexible payment schemes to offer more and more features to its customers. The launch of the search and compare tool is part of the firm’s super app strategy through which Klarna aims to offer everything online experience to consumers within its app.
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