Buy Now Pay Later (BNPL) services are surging in popularity during the cost-of-living crisis, with 63% of UK consumers relying on the payment method this Christmas, according to a new report from price comparison platform Forbes Advisor.
The research reveals that 70% of BNPL shoppers are using the payment service more than ever due to the tough economic climate.
BNPL shoppers aged 18-24 have been the most reliant on the service, with 80% increasing their spend in the last six months.
As everyday prices skyrocket, those aged 25-34 have also upped their spending, with 75% using them more regularly.
In addition, 32% are using BNPL to make payments outside their budget and 26% are using these schemes as an alternative to a credit card, after being rejected.
Some 39% of Gen Z users claim to be using BNPL to keep up with fashion trends.
Moreover, 38% insist that BNPL services act as an alternative method to purchase items when cash is a struggle. A further 38% favor the ability to break up the cost of purchases into manageable payments.
Electronics are the most common items to be bought using BNPL services, with 31% making a purchase, followed by luxury items such as designer clothing, jewelry and handbags, 24%.
A further 17% have used BNPL to purchase takeaways and with food delivery services increasingly partnering with supermarkets, the study indicates that people could start turning to BNPL for their everyday essentials more often.
However, the research also found that consumers need to pay back their debt within a couple months of their purchases.
Some 24% still need payments monthly and 27% are skipping them at least every few months. Specifically, 41% of people aged 18 to 24 are missing out on monthly payments and 26% are skipping them at least every few months.
“The attraction of BNPL is obvious – it brings products within reach for people who cannot afford the ticket price up front and who perhaps do not have access to other forms of credit,” Forbes Advisor money expert Laura Howard said.
“But the lure of being able to buy something immediately should not tempt people into a financial arrangement that they cannot manage or afford.
“If you’re late with your payments, there’s the prospect of fees, and you could end up staining your credit file, making it harder to secure financial products later.
“The government and financial regulator have already criticized some BNPL marketing activity as irresponsible, and we can expect tougher market regulation in 2023.”