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Buy now pay later - understanding and addressing the risks to consumers

Drawing on in-depth interviews with 30 Buy Now Pay Later (BNPL) users, this report explores when, why and how consumers use BNPL products to gain a better understanding of the potential risks consumers face in this market, allowing us to make recommendations for the design of forthcoming regulation.

Buy Now Pay Later (BNPL) products, which allow users to spread the cost of a purchase interest free over a set period of time, are an increasingly popular way to pay. A third (33%) of UK consumers report using this innovative form of lending and many consumers find this new, cheap form of borrowing beneficial.

However, our interviews with 30 typical BNPL users raises concerns that many shoppers do not fully understand the products they're using.

Many of our participants did not think of BNPL schemes as a form of credit. Instead, participants described the schemes as a 'way to pay' or 'money management tool'. The speed and simplicity of paying with BNPL at online checkouts appears to contribute to this misunderstanding. As a result, consumers have a low understanding of these products, and may unwittingly be exposing themselves to the serious risks of missing payments such as late fees, marked credit reports or referral to a debt collector.

BNPL - risks to consumers report 245 Kb | 06 Jan 2022
BNPL - risks to consumers methodology 245 Kb | 06 Jan 2022