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26 Jan 2022

Amazon and Barclays 'buy now, pay later' scheme explained

Find out about repayments, credit checks and how it compares to other BNPL schemes
Amazon website on laptop

Amazon has teamed up with Barclays on a 'buy now, pay later' (BNPL) payment option that allows you to split the cost of orders over £100.

The scheme - called Instalments by Barclays - launched in December 2021, and allows you to split your Amazon purchases into monthly instalments, lasting between 3 - 48 months.

BNPL schemes, such as those offered by Klarna, Laybuy and Clearpay, have grown rapidly in popularity in recent years.

But Amazon's BNPL option, which is fully regulated by the Financial Conduct Authority (FCA), looks slightly different from some of the other schemes you might be used to seeing or using at the checkout.

Here, Which? looks at how the scheme works and compares to other BNPL providers.

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How do repayments work?

You can choose to split your payment between 3 - 48 months on orders over £100.

Repayments are taken monthly and automatically from your account.

Unlike other interest-free BNPL schemes, such as Klarna, Laybuy and Clearpay, you will be charged interest when using Amazon's 'pay later' scheme.

Barclays told us the headline APR on Instalments by Barclays is 10.9% for online purchases, although promotional rates and interest-free financing may be available at times.

You can manage your account directly through the Barclays app, even if you don't bank with Barclays.

Are there any product or seller restrictions?

Sellers don't have to opt-in to use the scheme, so you should be able to split payments on orders from any Amazon seller if you're accepted.

But there are some restrictions on what you can use the scheme to pay for.

Instalments by Barclays is not available for orders containing Amazon Gift Cards, digital products, groceries, pre-sale products and out-of-stock products.

The minimum spend for each order is £100.

Credit and affordability checks

Before you can use the scheme, Barclays will carry out a hard credit check to ensure you're not given access to more credit than you can comfortably afford.

Hard credit checks also ensure other lenders have an accurate picture of your monthly credit commitments if you apply for credit elsewhere.

Not all BNPL providers carry out these full checks, so you might find that your application isn't accepted even if you're regularly accepted with other BNPL schemes.Some use 'soft' credit checks which means they just check some basic information about you and don't show on your credit report or impact your credit score.

If you're approved, you'll find your reusable credit account added to your wallet and available as a payment option at Amazon's checkout.

You can then make repeat purchases without needing to reapply, as long as the order value remains with your overall credit limit and monthly payment limit.

There are other eligibility requirements too - you must be over 18 years old and have been a UK resident for at least three years.

Here's a table to show the checks other BNPL providers perform before lending you credit.

BNPL schemeHard or soft credit check?
Amazon's Instalments by BarclaysHard check
ClearpayNo affordability checks. You get a low limit which increases if repayments are made.
Klarna 'Pay in 3' and 'Pay in 30'Soft check
LaybuyHard check
OpenPayHard check for the first transaction followed by soft checks for subsequent transactions
PayPalSoft check (if needed)
ZilchSoft check

What if I miss a repayment?

If you're struggling to meet your monthly repayments, you should contact Barclays as soon as possible.

You won't be charged any late fees, but if you fail to make a repayment and don't get in touch with Barclays you may accrue additional interest and your credit score may be impacted.

Barclays told us that in extreme cases you might also be referred to a Debt Collection Agency.

Here's a table to show how this compares to other BNPL schemes.

BNPL schemeWill my credit score be impacted if I miss a repayment?Will I be charged late fees?
Amazon's Instalments by BarclaysYes - Barclays says it may be impactedNo
ClearpayNoYes
Klarna 'Pay in 3' and 'Pay in 30'NoNo
LaybuyYesYes
OpenPayNoYes
PayPalYes - PayPal says your credit records may be affectedNo (for agreements made after 30 September 2021)
ZilchZilch says it may provide details of late payments to credit reference agencies which could affect your credit ratingNo

What if something goes wrong with my order?

Unlike most other BNPL schemes, Amazon's 'pay later' option is regulated by the FCA.

This means that if something goes wrong with orders worth £100 to £30,000, such as your parcel going missing or receiving a faulty item, you'll be covered by Section 75 protection if you paid using Amazon's BNPL scheme.

Similarly, if you're unhappy with the scheme or the service received, you can make a complaint to the Financial Ombudsman Service who will investigate your issue and can help you reach a resolution.

You can also let us know of any issues via our BNPL complaints form - we're keen to hear people's problems to help inform new investigations and hold BNPL providers to account.

2/2/2022: Table updated to say that Clearpay users' credit scores will not be impacted if they miss a repayment