15 million UK consumers are buying now but paying later


Almost 15 million consumers are using buy now, pay later credit, up by nearly a quarter from a year ago.

Twenty-eight per cent of adults made at least one repayment using the rapidly expanding form of borrowing last month.

Research by Equifax, the credit data company, found that 2.6 million more people had used providers including Klarna, Clearpay and PayPal than last December, a 23 per cent rise.

There has been a recent stampede of large financial institutions and digital lenders into the sector, ranging from Revolut and Monzo to Barclays in the United States and Goldman Sachs in combination with Apple.

Supporters of buy now, pay later say that it is positive for consumers as it is on the whole cheaper than credit cards, while critics say that it increases indebtedness, particularly among younger people by encouraging them to spend more.

The products allow customers to pay for goods in instalments using an interest-free loan. The provider funds the loan through fees from retailers, which sign up as they generate more sales from customers. The Treasury is consulting on ways to regulate the sector.

Equifax found that the total amount repaid by an average user each month had risen from £120.35 in December last year to £125.32 last month. Its research also showed that one in ten shoppers expected to use buy now, pay later in the run-up to Christmas. A total of 27 per cent said that they would struggle to afford Christmas without using the longer time to pay for goods.

Citizens Advice said it was “calling for the sector to be urgently regulated to make sure consumers are properly protected”. Kate Hobson, consumer expert at Citizens Advice, advised consumers: “Make sure you understand what you’re signing up for, how you’ll make the repayments and what will happen if you can’t pay on time.”

Equifax analysed data from 8,700 current accounts and 2,000 consumer interviews.


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