From Buy Now, Pay Later, to….Buy Now, Pain Later

Buy Now, Pay Later is often advertised at checkouts as an easy way of splitting or delaying payments on items such as clothing or electronics. But it remains unregulated, and we are particularly worried about the rise of firms offering this scheme, especially for food shopping, in the past few years.

Buy Now, Pay Later (BNPL) is a financial product that lets people split or delay payments to make them more manageable in the short term. Whilst this is helpful for some, as a credit product it is inherently risky. As another type of installment loan, it divides your purchase into multiple equal payments, instead of paying in full at the checkout, allowing you to pay back in installments over a period of time, usually from a couple of weeks up to three months.

The rise of firms offering BNPL Before the cost-of-living crisis, millions of people in the UK used Buy Now, Pay Later (BNPL) to split or delay payments. Even then there was a risk of falling into debt, due to lack of the necessary care, information, and affordability checks. Now, with the cost-of-living crisis, the number of people turning to BNPL schemes is on the rise as one in 12 people has turned to BNPL to cover basic costs, such as food and toiletries. More than two in five BNPL customers borrowed money to make repayments, Citizens Advice has found. The types of borrowing included overdrafts, borrowing from friends and family, loans, and payday loans. The most popular was credit cards (26%).

Some are relying on it more than others Citizens Advice has discovered that young people, those in debt, and those claiming Universal Credit, are at least twice as likely to have used BNPL for essentials than the general population. Worryingly, we have found that more than one in ten Buy Now, Pay Later customers didn’t fully understand how the repayments would be set up. The fact that people are turning to BNPL for their groceries highlights the urgent need for industry regulation. With the cost-of-living crisis, we fear more people in desperate situations will see this unregulated form of credit as the answer.

The BNPL market continues its meteoric growth. But the sector remains unregulated The spiral of debt from Buy Now Pay Later is not a risk-free alternative. Buy Now Pay Later is part of the credit industry and must urgently be regulated as such. The Government must keep pace with these firms and ensure consumers are protected. Citizens Advice Stevenage is calling for regulation to protect customers, including market-wide affordability checks and clearer information at checkouts. For more information contact: Citizens Advice Stevenage Website: www.castevenage.org.uk Adviceline: 0800 144 8848 - Calls to Adviceline are free from mobiles & landlines Location: Sixth floor, Daneshill House, Danestrete, Stevenage, Hertfordshire, SG1 1BY We give people the knowledge and confidence they need to find their way forward; whoever they are, and whatever their problem.