Two in five buy now, pay later shoppers borrow funds to clear the debt
More than two in five recent buy now, pay later (BNPL) shoppers relied on credit cards or other forms of borrowing to pay off what they owed, the charity Citizens Advice has said.
It said the figures showed that shoppers are “piling borrowing on top of borrowing” and underlined the urgent need for BNPL to be regulated.
On Monday, Apple unveiled a BNPL feature for iPhones, which will initially be launched in the US in or around September and could come to the UK a few months later.
BNPL lets shoppers stagger payments for goods with no interest or charges – unless they fail to pay back on time, at which point some firms impose late fees. Typically the cost is split into weekly, fortnightly or monthly instalments.
Two of the biggest BNPL firms operating in the UK are Klarna and Clearpay, and other big players include Laybuy and Zilch.
This form of credit has enjoyed explosive growth during the coronavirus pandemic, particularly among under-30s and those with tight finances. However, the rate of growth is thought to have slowed during the last few months as the cost of living crisis has prompted people to cut back on non-essential spending.
A survey was carried out for Citizens Advice in March involving 2,288 people in the UK who had used BNPL in the previous 12 months.
More than two in five respondents (42%) said they used borrowing of some sort to finance their repayments, with credit cards by some distance the most popular option. Others included overdrafts, borrowing from friends and family, and personal loans and payday loans.
Younger shoppers were the most likely to borrow to pay off BNPL purchases. The charity found that 51% of 18- to 34-year-olds borrowed money to pay off BNPL debts.
The government has said BNPL is to be
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