© Reuters. Brits feel grip of recession as “buy now, pay later” demand rises
Proactive Investors – UK residents of all ages have increased their use of “buy now, pay later” deals (BNPL), a survey from the Centre of Financial Capability (CFC) found.
Around 54% of 18–24-year-olds expect to take out a loan in 2023, up 6% on last year, whilst demand among 65+ year-olds increased by almost 10% with a fifth of respondents expecting to use the deal.
BNPL allows customers to divide payments over time on their purchases, but fears are growing about increased customer borrowing.
“The fact that people of all ages are turning to buy now, pay later as they are struggling to meet payments due to rising inflation shows the need for urgent regulation of these schemes,” the CFC said.
Financial technology companies such as , Klarna and -which all offer BNPL- saw US borrowing grow to US$24bln in 2021, research from the Consumer Financial Protection Bureau found.
Affirm and Paypal shares are down 79% and 54% respectively for the past twelve months, due to increased interest rates from centralised banks trying to curb inflation.
More than 30% of 18–34-year-olds reported paying late payment fees for BNPL and only 65+ year-olds saw a decrease in missed payments compared to 2021, the report from CFC added.
BNPL remains unregulated in the UK, which could see borrowers and lenders at risk should the loans remain unpaid.
“Resorting to credit to keep up with bills or essentials is unsustainable and ultimately exacerbates problem debt” said Richard Lane a director at charity StepChange.
