Nearly a quarter of Britons who have utilized buy now, pay later (BNPL) services have incurred late payment fees, according to a survey conducted by the Centre for Financial Capability, an education charity.
The popularity of BNPL services has surged in recent years, with one-third of UK adults having used them—rising to 40% among those aged 18 to 34. Approximately 25% of individuals using or considering these services cite the current cost of living and inflation as factors driving their decision, while 17% plan to use them to cover extra expenses during the Christmas season.
Despite being generally interest-free, the charity cautions that users face risks, including late fees and negative impacts on their credit scores. In the past six months, around 25% of BNPL users have missed one or more repayments, with this figure increasing to 34% among the younger demographic of 18-34-year-olds.
Among those who have missed payments, about two-thirds have done so multiple times. More than a quarter of these individuals have experienced a decline in their credit score or have been contacted by a debt collection agency as a result.
The Centre highlights that the unregulated nature of the BNPL sector means providers are not required to conduct background and affordability checks on users, which can lead to accumulating debt from multiple late payments to various schemes.
Jane Goodland, a trustee of the Centre for Financial Capability, comments, “These figures illustrate the prevalence of Buy Now, Pay Later schemes and the significant financial risks users encounter in this largely unregulated market. As the cost-of-living crisis continues to affect the British public, it’s clear that many are increasingly dependent on these schemes without a thorough understanding of the risks involved.” She adds, “Worryingly, our findings reveal a substantial number of users who have suffered from late payment fees, deteriorating credit scores, or even contact from debt collection agencies.”