Over a quarter of UK consumers (28 per cent) now usage buy now, pay later (BNPL) regularly to spread the cost of their purchases, amid uncertainty about the market’s incoming regulation.
Thousands more shoppers are also expected to trial using BNPL schemes for the first time as the festive season closes in, according to Equifax.
The BNPL sector has grown massively in recent months, with big players including Klarna and Clearpay jumping to the forefront.
The sector’s growth has prompted scrutiny from the Treasury and the Financial Conduct Authority (FCA) as a result.
Equifax, which is one of the country’s leading credit reference agencies, found that despite the growth of the number of users of BNPL schemes, the total sum borrowed hasn’t risen as quickly.
The average user made £125.32 of BNPL repayments last month, just £5 higher than the £120.35 in December 2020, broadly in line with inflation.
The average number of monthly transactions also grew slightly, fluctuating around 5.02 in 2021, and hitting 5.76 last month.
“BNPL is not a new concept, it’s been part of the UK’s credit industry for decades, but it has taken on new forms in recent years that has sent its popularity soaring,” Equifax chief product and marketing officer Jayadeep Nair said.
“For switched on shoppers that want to smooth out their spending over the festive period, it can be an incredibly useful budgeting tool, and may soon even help those with thin credit files to build up a healthy credit score.”
“However, as useful as BNPL can be, it’s important that shoppers don’t see it as a way to overstretch themselves in the coming weeks.
“Prices are rising, interest rates are creeping up, and unless wages keep pace, most borrowers will see their finances squeezed over the coming months.
“The message to shoppers considering using BNPL at the checkout is clear: are you sure you can make the repayments on time? And could you have afforded this purchase without BNPL?”