2.5m more Brits join buy now, pay later mania in just 10 months
The data reveals that 28 per cent per cent of the adult population made at least one buy now, pay later purchase in October this year, compared to 23 per cent in December last year.
Over a quarter of people using buy now, pay later services this Christmas say they would struggle without it, according to new research, which shows that in the past 10 months more than 2.5m new people in the UK are using such services.
The research, compiled by Equifax, the credit reference agency, sheds light on the rise of buy now, pay later, which has become an increasingly popular form of an alternative payment both online and on the high-street. Critics, however, say that buy now, pay later encourages users to get into debt who can't afford to.
The data reveals that 28 per cent of the adult population made at least one buy now, pay later purchase in October this year, compared to 23 per cent in December last year.
Equifax says this means that 2.6m more people in the UK are now using such services compared to 10 months ago.
Despite the rise in adoption of services from the likes of Klarna,Clearpay and PayPal, the total amounts repaid by an average user of buy now, pay later rose only by £5 over the period, from £120.35 to £120.35.
The average number of monthly transactions also grew slightly, fluctuating around 5.02 in 2021, and hitting 5.76 last month.
The research involved data from over 8,700 current accounts using open banking, and 2,000 consumer interviews.
During Christmas, the data reveals that a fifth of 18–35-year-olds expect to use buy now, pay later to soften the financial blow of buying presents this Christmas and over a quarter (27 per cent ) say they would struggle to afford Christmas without its help.
More than a fifth (23 per cent) hoped it will help them bag a bargain this Black Friday.
In total, nine per cent said they planned to use buy, now pay later products over Christmas, driven by younger consumers, with a fifth (21 per cent) of them using such services, compared to eight per cent of 35-44 year olds and just two per cent of over 55s.
Likewise, the data should that the younger generation, as well as those earning more than £50,000 were most likely to use buy now, pay later for Black Friday and Cyber Monday.
Jayadeep Nair, chief product and marketing officer, Equifax UK, said: “Buy now, pay later 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."
“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 buy now, pay later 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 buy now pay later at the checkout is clear: are you sure you can make the repayments on time? And could you have afforded this purchase without buy now, pay later?”
Broken down by gender, the data shows that more men use buy now, pay later services for buying white goods; consumables and hobbies and culture products but women topped men when it comes to fashion products.