The “Buy Now Pay Later” (BNPL) apps have become a prominent feature in the UK’s e-commerce landscape, offering consumers a convenient way to spread the cost of their purchases over time, often without the need for a credit check. These apps have seen a significant increase in usage, with recent data from the Financial Conduct Authority (FCA) indicating that 27% of UK adults used BNPL services in the six months prior to January 2023, up from 17% in the preceding 12 months as of May 2022
Klarna BNPL app
One of the most popular BNPL services in the UK is Klarna, which offers various payment options, including paying in 30 days, three interest-free instalments, or a financed payment plan that includes a credit check and interest. Klarna has established partnerships with a wide range of retailers, making it a versatile choice for consumers
Clearpay BNPL app
Clearpay, another major player in this sector, targets millennial spenders who prefer debit to credit, offering a way to split payments without the risk of incurring debt. This app splits the final shopping total into four equal amounts, paid back at two-week intervals with no interest charges
Laybuy BNPL app
Laybuy offers a different approach by allowing consumers to spread the cost of their purchases over six weeks in interest-free instalments. This service is particularly useful for those on a tight budget who do not want to compromise on style or quality
Openpay BNPL app
Openpay, yet another BNPL service, focuses on providing flexible payment options for businesses and their customers. This platform helps to ease the financial strain on consumers by allowing them to split their purchases into manageable instalments
Popular BNPL products
Interestingly, the research conducted by C+R Research shows that clothing and electronics are the most common types of purchases made using BNPL services. The study also found that while these services offer ease and flexibility, they can also lead to financial risks, with over half of the users regretting purchases due to their high cost and almost the same proportion being behind on payments or likely to make a late payment within the next 12 months
BNPL Regulations
In terms of regulations and consumer protections, the FCA has been active in securing changes to potentially unfair and unclear contract terms for unregulated BNPL firms, aiming to protect consumers, particularly those in vulnerable circumstances, and ensure they are provided with sufficient information
Conclusion
Overall, BNPL apps offer a convenient and flexible way to manage finances, but it is important for consumers to understand the terms and conditions and to use these services responsibly to avoid financial difficulties.
