The average time UK shopper say it will take them to clear their BNPL debts is now nine months, well in excess of of the 30-90 day windows most schemes are based on.
UK consumers owe an average of £244.37 per person to Buy Now Pay Later (BNPL) schemes such as Klarna, Clearpay and Laybuy, the ‘Shop Now, Stress Later’ report from money.co.uk reveals:
Payl8r tops the 2021 list, with £347.86 worth of debt per shopper and more than a fifth have no confidence that they will be able to pay what they own back in time.
James Andrews, senior personal finance editor at money.co.uk says: “The savings offered by BNPL borrowing are at best negligible compared to traditional credit cards, and at worst could end up costing you far more in the long run. If managed responsibility, credit cards offer far more flexibility. Using the right credit card lets you split payments over as long as 21 months currently, with almost no card charging you for the first 56 days or so."
One in five (19%) of the 2000 shoppers surveyed admit BNPL is a way to buy now, and worry later. Young shoppers were found to be particularly susceptible to the marketing tactics of BNPL brands. One in eight (13%) 18-24 year olds highlighted social media influencers in their decision to shop now and pay later. This figure is up by a quarter (+26%) when compared to the data from 2020.
“Our research suggests that young people in particular are turning to BNPL borrowing as an alternative to credit cards," says Andrews. "But while the glitzy marketing campaigns for BNPL lenders might position them as attractive alternatives; in reality they are simply shifting consumer debt to platforms that offer less flexibility, support and protection for consumers."
The marketing and branding of BNPL schemes are part of the wider problem, says Andrews.
“Younger audiences who spend a significant amount of time on social media are bombarded with bright, colourful and age-appropriate adverts for these payment platforms," he says. “According to the Klarna website, as many as 44% of users would have abandoned a previous purchase if the option wasn’t a viable option. Although this impressive statistic may be welcomed by online retailers attempting to recoup pandemic-related losses, it also raises questions about how shoppers perceive BNPL debt."
UK debt charity StepChange is calling on BNPL schemes to put in place clearer communication and stronger consumer protection and wants the Government to underpin the shift with regulatory interventions.
Sue Anderson, head of media at StepChange comments: “It would be a good start to improve cancellation policies, and also not make BNPL an over-promoted option at checkout. Consumers must be put in full control of the services they use, and not put in a situation where they inadvertently find themselves acquiring debt that may cause them difficulty.”