Capco survey highlights need for consumer education and regulation of Buy Now Pay Later sector

LONDON, NOVEMBER 27, 2020 – A desire for greater regulatory oversight and a need for more education around Buy Now Pay Later (BNPL) personal finance products are two of the findings of a new survey of UK consumers conducted by Capco, the global management and technology consultancy.

A UK Survey of Consumer Attitudes to BNPL notes that, over the past year, more than ten million people in the UK have purchased products or services through a BNPL scheme. As the name suggests, BNPL allows consumers to delay or stagger payment when purchasing a product or service. This flexible credit option has grown in prominence and popularity in recent years, notably since the 2014 arrival in the UK of Swedish digital bank and leading BNPL provider Klarna.

In conjunction with market research and polling company Brandwatch Qriously, Capco polled over 2,000 individuals across four age categories between 18 and 65+ years of age on their BNPL usage. The aim was to determine where BNPL fits within the wider consumer credit industry, to better understand consumer spending habits, and to gauge levels of financial education around these products.

Key findings of the survey include:

1. BNPL raises the spectre of debt

50% of respondents aged 18-34 have missed a BNPL payment. Nearly two thirds (62%) of this group said BNPL has led them to spend more than they would have otherwise.

2. Financial education is lacking

There is a popular misconception about BNPL: 44% of respondents are unsure whether BNPL means ‘taking on debt’ or ‘deferring a payment’. Among young people (18-34 age group), this rises to a total of 57%.

3. Consumers would welcome increased regulation around BNPL
Over half of respondents want BNPL products to be regulated (54%). In addition, 52% want providers to consider their credit history before financing is approved.

4. Credit cards continue to be the most popular form of credit…
74% of respondents use a credit card, versus 56% who have used BNPL.

5. …but BNPL is gaining ground
Almost half of BNPL users (46%) say BNPL is their preferred form of credit. 45% of respondents would like BNPL to be integrated with their current account or credit card.

6. COVID has led to increased use of BNPL among some respondents
32% of BNPL users say their usage of such services has increased during COVID-19.

7. Market leading brands are already established
Klarna is the most popular BNPL product with young people (18-34 age group). PayPal Credit is the most well-known provider across all generations surveyed.

The full survey can be found here.

Mike Ethelston, UK Managing Partner at Capco, said: “Buy Now Pay Later providers are predicted to double their market share of online purchases within the next three years. However, with BNPL coming under increased regulatory scrutiny, plus the ongoing economic fallout of COVID, there are questions to be asked about the future trajectory of BNPL in the UK, and what opportunities exist for established banks to make in-roads in this sector.”

Ian Hooper, Partner and UK Head of Banking & Payments at Capco, said: “We are seeing more banks enter the BNPL and instalments space, which suggests BNPL is viewed not as a fad but is recognized as a segment that is growing faster than any other online payment method. It has been suggested that almost one in five UK consumers say that they would not shop with a retailer who didn’t offer a BNPL option. That should act as a wake-up call not only retailers but also as a potentially lucrative opportunity within the larger credit market for both lenders and payments providers.

“At the same time, the combination of BNPL’s frictionless customer experience, point-of-sale business model and competitive, interest-free lending terms could be putting traditional credit forms under threat. Banks and credit card companies now need to think more strategically about their market offerings. While instalments and BNPL are a relatively new lending proposition, the underlying business model remains the same as traditional lending. So we believe banks could make a defensive play to extend their current business models into this new channel.”

The survey was conducted during September and October 2020. It polled 2,016 respondents, 996 of whom were male and 1020 female, and was split across four individual age demographics – 18-34, 35-54, 55-64 and 65+. All respondents were UK-based, with the majority located in or around England’s major cities, including London, Manchester, and Birmingham.

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Media contacts:

Matthew Jones
Four Communications

Notes to editors:

Capco is a global technology and management consultancy dedicated to the financial services industry. Our professionals combine innovative thinking with unrivalled industry knowledge to offer our clients consulting expertise, complex technology and package integration, transformation delivery and managed services to move their organizations forward. Through our collaborative and efficient approach, we help our clients successfully innovate, increase revenue, manage risk and regulatory change, reduce costs, and enhance controls. We specialize primarily in banking, capital markets, wealth and asset management and insurance. We also have an energy consulting practice in the US. We serve our clients from offices in leading financial centres across the Americas, Europe and Asia Pacific. To learn more, visit our web site at, or follow us on Twitter, Facebook, YouTube, LinkedIn and Instagram.