Buy now, pay later options are increasingly popular in the United Kingdom, expected to reach $60 billion by 2029. But concerns about how consumers use BNPL are growing as well, especially among younger users.
A study by Research and Markets estimated that the gross merchandise value of BNPL in the UK reached $33.81 billion in 2023, and is projected to grow to $38.76 billion this year. Britain’s Financial Conduct Authority found that nearly 14 million British people used BNPL to make purchases in the six months leading up to January 2023. And BNPL payment adoption is expected to grow at a CAGR of 9.6% from 2024 to 2029.
But BNPL has also led to what could be perceived as irresponsible financial decisions in the country. According to a report from the British information organization Citizens Advice, 11% of consumers have used BNPL for grocery shopping, rising to 35% among frequent users. Additionally, a report from the Centre for Financial Capability found that 22% of BNPL users missed one or more repayments in the six months prior to December 2023.
Younger consumers especially seem to run into issues over BNPL, even though the adoption rate has been highest among consumers ages 25 to 65. The Centre for Financial Capability report found that 34% of consumers ages 18 to 34 had to pay charges for missed repayments during the six-month period. In contrast, among people ages 55 and older who used BNPL services, only 7% to 10% of users in that age group faced late charges.
Many BNPL Users Expect to Have Issues with It
Surveys have shown that many users expect to run into payback issues. Prior to the holiday season, Creditfix surveyed more than 2,000 adults in the UK and found that nearly a quarter planned to use their credit cards or a BNPL service for their Christmas shopping.
At the same time, more than two-thirds of consumers surveyed by Creditfix said they felt anxious about the holiday season, particularly in terms of spending more than they should. Fully 20% of those surveyed said that it would take them roughly three months to pay off their bills, with some expecting to continue paying off purchases into the 2024 holiday season.
It’s not surprising that economically precarious consumers would be more likely to turn to BNPL options. In the U.S., the Federal Bank of New York found that consumers with lower credit scores make up a disproportionate share of BNPL users.
