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Recent research reveals that more than 25% of the UK population has adopted Buy Now, Pay Later (BNPL) services within a six-month timeframe. To enhance consumer understanding and protections, the Financial Conduct Authority (FCA) has entered agreements with two companies, PayPal and QVC, aimed at simplifying their contract terms.
According to the FCA’s findings, 27% of UK adults, equivalent to around 14 million individuals, employed BNPL services at least once in the six months leading up to January 2023. This indicates a notable increase from the 17% who reported using BNPL in the 12 months preceding May 2022.
Furthermore, individuals who utilized BNPL more than ten times within the past year are over twice as likely as non-BNPL users to also have high-cost credit products. They are nearly twice as likely to have accumulated more debt on credit products over the past year (51% compared to 27%). Moreover, they are more than four times as likely to have missed payments on a bill or credit obligation in three of the previous six months (27% versus 6%).
Sheldon Mills, Executive Director of Consumers and Competition at the FCA, commented: “Our research shows a significant increase in the use of BNPL over the past year. When used appropriately, the product provides valuable benefits, but we want to ensure that consumers, particularly those in vulnerable circumstances, have adequate protections and are given sufficient information.”
While the FCA does not yet have regulatory authority over BNPL products, it has collaborated with PayPal and QVC to voluntarily simplify the terms of their continuous payment authority agreements. Additionally, PayPal has improved the transparency and fairness of terms related to consumer cancellations of purchases funded by loans.
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