During September and October 2020, Capco conducted a survey on the rise of Buy Now Pay Later (BNPL) personal finance offerings. We set out to understand BNPL usage and where it fits in the wider consumer credit industry, as well as key trends for consumer spending habits and differing levels of financial education. The report represents a broad range of respondents, across four individual age demographics (18-34, 35-54, 55-64 and 65+). We collected responses from 2,016 individuals within the UK.
Buy Now, Pay Later (BNPL) is a point-of-sale personal finance proposition, which like its title suggests, allows consumers to take a product and delay or stagger the payment. Since 2014, when Klarna first launched in the UK, a wave of similar BNPL start-ups have succeeded in accessing funding and avoiding strict regulation to accelerate their growth. But as regulators begin to impose stricter rules within this sector, and as the economic fallout of COVID-19 continues, we wanted to find out what this means for the future of BNPL – and what opportunity it presents for banks.
In this survey, we feature insights on a number of leading BNPL providers including:
- PayPal Credit
We also share consumer data on credit cards, storecards, and other forms of point-of-sale finance.
Key findings include:
1. BNPL COULD RISK PUTTING PEOPLE INTO DEBT.
Almost half of young respondents (18 – 34) have missed a BNPL payment.
2. FINANCIAL EDUCATION IS LACKING.
There is a popular misconception about BNPL – 44% are unsure whether BNPL means ‘taking on debt’ or ‘deferring a payment’. Among young people (18 – 34 years) this rises to a total of 57%.
3. CONSUMERS WOULD WELCOME BNPL REGULATION.
Over half of consumers surveyed want BNPL products to be regulated (54%); and 52% want providers to consider their credit history before financing is approved.