The UK’s ‘buy now, pay later (BNPL) sector will be worth nearly £27 billion by 2024 according to the UK’s only BNPL travel agency.
The research by Butter has found that the increasing adoption of BNPL schemes in the UK will drive a 175 per cent increase over the next three years.
The sector has gained significant traction in recent years, driven by market leaders Klarna and Clearpay.
There are currently 24.8 million BNPL users in the UK according to the report, 37 per cent of the total population.
The report says that 4.3 million consumers in London use the most BNPL providers, nearly half of its entire population (48 per cent), while the North East contains the lowest number of users at 907,780
Butter’s research also found that while a large percentage of the UK population has already started using the payment method, it’s estimated that the BNPL sector only currently accounts for five per cent of the UK’ ecommerce market.
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Digital and mobile wallets are the most dominant forms of ecommerce payment at 32 per cent, with debit cards coming second with 29 per cent and bank transfers coming just above BNPL with six per cent.
It also estimates that BNPL’s market share of five per cent, worth £9.8 billion, will grow rapidly in the next few years.
A separate study from World Pay concluded that the UK’s ecommerce sector was to increase by £72.9 billion by 2024, a 37 per cent increase.
The BNPL market is expected to double its market share to 10 per cent in the same period.
Further research from Finder revealed that 37 per cent of Gen X use BNPL schemes, with that figure rising to 54 per cent and 50 per cent in Millennials and Gen Z respectively
“Millennials and Generation Z are fast becoming the predominant generations, both in terms of size and where economic spend is concerned,” Butter chief executive Tim Davis said.
“This is likely to cause a further shift in consumer behaviour as these generations are already showing a greater tendency to adopt new methods of transacting via the e-commerce space.”
Davis predicts that credit cards and digital wallets will still remain the preference for many but believes that pre-paid cards and cash on delivery will be “resigned to the history books”.