/payments

News and resources on payments systems, innovations and initiatives worldwide.
UK's 'buy now, pay later' market booms despite credit score concerns

UK's 'buy now, pay later' market booms despite credit score concerns

The UK's point-of-sale credit market is surging, according to analysis from consultant Kearney, with two thirds of millennials now using 'buy now, pay later' services - despite some concerns about the impact on credit scores.

With big names such as PayPal Credit, Klarna and Clearpay growing fast, the estimated £10 billion POS credit market is predicted to rise at over 15% per annum with growth driven by younger consumers, suggests Kearney, which surveyed more than 2200 Brits.

More than 40% of millennials have used a 'buy now, pay later' service more than once in recent years. Gen X is nearly as keen, with 57% having used this type of finance, and 34% having done so more than once.

Nearly 60% of shoppers would use POS credit for a purchase over £250, whether or not they could pay the full price up front - including 12% who would use the credit to trade-up and buy a more expensive product.

Nearly 40% say that if making a purchase costing £250 or more, they would prefer to buy from a retailer that offered a ‘buy now, pay later’ option. This is especially true for younger shoppers - 51% of millennials agreed and 42% of Gen Z.

Sameer Pethe, principal, Kearney, says: "Retailers who understand their role in responsible lending can stand to benefit from offering ‘buy now, pay later’ credit services. For some consumers, access to POS credit is now a reason to use a particular retailer - and this trend will become more significant as the market for these services continues to grow.”

However, concerns over the rise of buy now, pay later are also growing, with a recent survey from comparethemarket.com finding that 22% of users have had their credit scores negatively affected.

Despite the worries, according to the BBC the Financial Conduct Authority has not been looking at the industry as part of its investigation into consumer credit because the products do not charge interest.

In the absence of action, charities have been urging caution, with Dan Lane from Christians Against Poverty telling the BBC: "Overall, we would say to people that if you can't afford the product today - why do you think you could afford it in 30, 60 or 90 days time?"

Comments: (0)

Trending Stories