Among the proposals set out by the regulator are for credit agreements laying out the terms of deals when people take them out, and for retailers promoting the services to ensure people understand the risks. The consultation also suggests section 75 of the Consumer Credit Act should apply, making BNPL providers jointly liable for the contract with the retailer in the same way that credit card providers are.

The growth of the market is phenomenal, with the value of transactions more than tripling in 2020 - to £2.7 billion. Since the consultation started in October, millions of people have taken out new loans to cover the costs of Christmas shopping. Citizens Advice said that one in ten people used Buy Now Pay Later over Christmas alone.

Many of the BNPL users interviewed by Which? did not think of BNPL schemes as a form of credit. Instead, participants described the schemes as a ‘way to pay’ or a ‘money management tool’, rather than a credit provider. One user said: “It allows payments to be spread out for budgeting. It made things possible which in one go would have been extremely difficult and I would have probably had to borrow money from elsewhere.”

Another user said: “It seems really convenient and no hassle. It just asks a few questions so it doesn’t feel like you’re committing to a credit agreement.”

The research also revealed low engagement with BNPL providers’ terms and conditions. Most BNPL users said they either skimmed the T&Cs or simply ticked a box to say they had read them in full.

As a result, some users had a limited understanding of the consequences of missing payments, and the safeguards and checks carried out by BNPL providers. Some participants were not aware there were late payment fees at all.

Which? is calling for stronger safeguards to protect consumers, including steps in the checkout process to ensure people understand they are borrowing money when using BNPL, and warnings about the risks of using the schemes.

Rocio Concha, Which? director of policy and advocacy, comments:“Buy now, pay later (BNPL) schemes can offer speed and convenience at the checkout, but our research shows that many users do not realise they are taking on debt or consider the prospect of missing payments.

“That is why there must be stronger safeguards to protect consumers and warn about the risks of using the schemes. Payment terms, late fees and the potential consequences of missed payments should be communicated at the point of transaction.

“There must also be no further delay to plans for BNPL regulation, which should include much greater marketing transparency, information about the risks of missed payments and credit checks before consumers are cleared to use BNPL providers.”

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown concurs. “Regulation of buy now, pay later needs to start now - not later," she says. "The Treasury’s consultation closes today, and the FCA has said regulations will kick in this year, but it can’t afford to drag its feet, because while it’s going through this process, the sector is mushrooming before our eyes."