Just half of BNPL (Buy Now, Pay Later) users in the UK are aware of late payment fees, and even fewer know the potential amounts of these fees, according to research conducted for the Lending Standards Board (LSB).
BNPL usage has significantly increased in recent years, with a study by Citizens Advice suggesting that over one in four UK adults—approximately 15 million people—planned to utilize BNPL options to manage their holiday spending.
New findings from RFI Global for the LSB reveal that only 52% of BNPL users are informed about late payment fees, while 50% have a rough idea of how much these fees may be before they encounter them. Furthermore, 15% of BNPL users have faced late fees, a figure that climbs to 22% among individuals with ‘poor’ or ‘very poor’ credit ratings.
The data indicates that slightly more than a third of BNPL users decide to use these services only at the checkout stage, and about 60% are unaware that BNPL products are unregulated.
Late last year, the UK Government announced plans to introduce regulations for BNPL that will place companies under the supervision of the Financial Conduct Authority (FCA) and enforce the Consumer Credit Act. However, the LSB has noted that these regulations are not expected to take effect until at least 2026.
Emma Lovells, chief executive of the LSB, commented, “The Government’s announcement on BNPL regulation was very welcome, but in the interim period before regulation is implemented, lenders must not be complacent.
“Increased awareness of these products and their requirements is essential, along with proactive outreach, particularly for those facing financial difficulties.”