UK BNPL Volume Jumps Almost 20% Amid Increased Scrutiny

British consumers are increasingly embracing buy now, pay later (BNPL) plans amid increasing government scrutiny.

Activity in the sector rose to nearly $27 billion by 2024 last year, a nearly 20% increase, Bloomberg News reported Thursday (Jan. 16), citing figures from GlobalData. This is a boom driven by companies like PayPal and Klarnaand newcomers to the UK such as confirm.

“Affirm is stepping into a competitive landscape,” Sameer Pethe, a partner at consultancy Kearney, told Bloomberg. “Traders who don’t plug in a point-of-sale solution are not many.”

The report also said that some retailers – such as eCommerce marketplace Very and Sports Direct – have launched their own BNPL services, which allow customers to buy in successive installments with no interest or credit check.

“The UK is one of BNPL’s leading markets in the world, with a high level of maturity, penetration, and competition,” said Matt Purnell, an analyst at Juniper Research, adding that the country has surpassed Sweden – the former leader in this area – in terms of volumes.

According to Bloomberg, the BNPL market in the UK has increased tenfold since 2019, driven by a crisis in the cost of living, higher interest rates from other forms of credit, and the loss of alternative payday loans.

However, the report says, new entries in this space are jumping in what could be a declining retail market. Shares in the UK’s top shopping chains fell this month after the report lackluster holiday sales.

The sector also faces increased regulation, with Great Britain Financial Conduct Authority set rules that are set to go into effect next year.

“Our approach will give shoppers access to key safeguards provided by other forms of credit while giving the sector the security it needs to innovate and grow,” said then Treasury Economic Secretary Tulip Siddiq last year.

The new rules require BNPL providers to ensure that customers are able to pay before offering a loan, and to issue “clear, simple and accessible” information about loan agreements in advance. The regulation also says that BNPL companies must offer refunds if consumers have problems with the products they buy.

Meanwhile, the regulators in America called for further study of the BNPL sector after determining that the purchase now, payment later to the borrowers. hold the higher balance on other lines of credit.

“The importance of BNPL in the credit profiles of BNPL borrowers highlights the need for more research to understand how this growing financial product is affecting the financial health of borrowers,” the Consumer Financial Protection Bureau (CFPB) wrote in a report released earlier this week.