Buy now pay later schemes bad news for consumer debt
Buy now pay later schemes are tempting shoppers into taking on unsustainable debt finds the Shop Now, Stress Later Study by Money.co.uk.
The study reveals:
- A fifth of UK shoppers admit to spending more than what they can afford
- Marks & Spencer, Samsung, and Nasty Gal are amongst the brands promoting BNPL
- One in five (20%) of the shoppers we surveyed admitted BNPL is a way to buy now, and worry about it later
- The average debt to BNPL platforms is £176.05 taking eight months to pay off
- Two thirds (55%) aged 18-34 admit buying with the intention of returning
But how are retailers getting British shoppers hooked on ‘buy now pay later’?
Taking a list of the UK’s most popular retail brands from YouGov, the Money.co.uk team scored each website on the number of BNPL mentions on product pages, checkout pages, and on the website homepage to reveal which brands are pushing Klarna, Clearpay, and Laybuy the most.
Fashion: Top brands ranked by BNPL website mentions
- Nasty Gal – 46 mentions of BNPL
- Boohoo – 42
- Pretty Little Thing – 41
- Next – 40
- Nike – 39
- JD Sports – 38
- Clarks – 32
- Levi’s – 32
- Adidas – 30
- ASOS – 26
Homeware: Top brands ranked by BNPL website mentions
- Marks & Spencer – 34 mentions of BNPL
- Topps Tiles – 23
- ScS – 22
- Debenhams – 17
- Furniture Village – 15
- Carpetright – 14
- Bensons – 13
- com – 12
- Dreams – 11
- John Lewis – 10
Tech: Top brands ranked by BNPL website mentions
- Samsung – 33 mentions of BNPL
- Curry’s – 17
- Apple – 15
- Canon – 14
- TomTom – 12
- Dell – 11
- Bose – 10
- Lenovo – 9
- GoPro – 8
- Phillips – 7
Salman Haqqi, a personal finance expert at money.co.uk said: “While Buy Now Pay Later schemes, like Zilch, Klarna and Clearpay, are quick and easy to join and seemingly harmless, they are in fact an entry point to debt for many.
“Their quick and easy sign-up process, minimal credit check, and youthful marketing appeal could be causing shoppers to sign up and spend more than they can afford without understanding the full risk.
“When taking on any sort of debt, it is important that you understand the risks in full otherwise you could end up in a cycle of debt that you can’t get out of. Our recent study shows that those who use Buy Now Pay Later services tend to overspend or purchase more than they otherwise would, as they have the option of breaking the payment into smaller chunks.
“Customers should note all of the terms and conditions and understand completely what they are signing up for to ensure that they are using the service correctly. For shoppers who are confident they can handle the repayments then it might not be a problem, but this is not always the case and there will be those who may not be able to pay off what they spend, and this puts them at risk”.