With millions of Brits set to use buy now, pay later options for their Christmas shopping, new research from Barclays suggests that many do not fully understand how the products work.
In a survey of 2000 Brits by Opinium for Barclays, more than a quarter say they have used BNPL. OF these, 46% say they are likely to use the option again to spread the cost of their Christmas shopping.
However, the data shows that shoppers’ knowledge of BNPL products is patchy, with two in five admitting they lack a full understanding of how the products work. And with 35% admitting they’re more likely to use BNPL as the cost of everyday living increases, Barclays claims that a growing indebtedness bubble could be on the horizon unless steps are taken to fully regulate lending at the point of sale.
Over a third admit to using BNPL to buy more than they are able to afford and a quarter report struggling to keep track of their spending having taken out loans with several BNPL providers. One in four say this has caused them to miss a repayment.
Barclays, which is one of the country’s biggest credit card providers, stresses the risks associated with the lack of regulation for BNPL products, something which the FCA is in the process of addressing.
Antony Stephen, CEO, Barclays Partner Finance, says: “This research shows that more must be done to educate consumers using unregulated ‘buy now pay later’ products. Too many people are taking out these loans without realising the impact it could have on their finances and with festive shopping in full swing, it’s important shoppers don’t run risk of signing up to agreements, which they may struggle to repay affordably in future.
“To protect consumers against taking on more debt than they can comfortably afford to repay, and to ensure minimum standards exist across the sector, we believe regulation should ensure all BNPL providers are required to undertake appropriate affordability assessments, consistent with those in place for other regulated consumer credit products.”