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Only one in six (16%) UK consumers believe BNPL products currently on offer are “trustworthy”
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Almost half (45%) worry that BNPL services could get them into debt
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78% would prefer to have a regulated BNPL option over an unregulated one
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64% of 18-34 year olds unaware BNPL can impact credit scores and 62% didn’t know it was a form of credit
14 August 2023 – A survey of UK consumers shows concerns about the lack of regulation in Buy Now, Pay Later (BNPL) options, with only 16% of UK consumers deeming BNPL “trustworthy”. Almost half (45%) worried that unregulated BNPL could get them into debt, and 58% of respondents had never used BNPL options and wouldn’t consider using them. The survey commissioned by NewDay, one of the UK’s largest providers of consumer credit, also highlighted the importance of regulations in building trust, with 78% stating they would prefer a regulated BNPL option over an unregulated one even if that meant a longer application process.
The findings also showed a lack of awareness of BNPL as a form of credit, especially amongst younger people. Despite 40% of 18-34 year olds having used BNPL options, the largest age range to do so, 64% were unaware that it was a type of credit and 62% didn’t know of its potential impact on credit scores. 78% were unaware that missing BNPL payments could be classed as a ‘loan default’, which can show on credit records making it difficult to borrow in the future. In total, 48% of UK consumers didn’t know BNPL could impact credit records, and 61% didn’t know missing BNPL payments could result in a default being registered against their credit file.
The findings follow HM Treasury’s consultation on draft legislation to regulate BNPL credit, following concerns of potential consumer harm without suitable affordability checks in place.
Ian Corfield, Chief Commercial Officer at NewDay, says: “While BNPL continues to be a popular option for younger consumers, its broader appeal is being hampered by a lack of regulation causing mistrust. Added to this is a poor understanding of BNPL as a credit product and the potential impact on credit score and records. It’s clear more needs to be done to educate consumers, and the regulation of BNPL products needs to be accelerated. But as an industry we also have a duty to protect consumers and to lend responsibly. We have already proven it is possible to successfully operate such products in a regulated environment through our digital credit account Newpay, which requires affordability checks, and we applaud those others who have taken the initiative to bring regulated offerings to the market. BNPL is here to stay and greater regulation and protection for consumers will unleash its full potential.”
ENDS
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About the research
Opinium Research surveyed a nationally representative sample of 2,000 UK adults between 27th January – 31st January 2023.
About NewDay
NewDay is a leading provider of unsecured credit in the UK, helping over 4.9 million customers move forward through responsible access to credit. It offers technology-enabled, flexible and innovative products directly to consumers and via its merchant relationships.
NewDay operates multiple direct-to-consumer products through well-known brands such as Aqua, Fluid, Marbles and Bip - the UK’s first digital only credit “card”. In its Merchant Offering business, NewDay provides co-branded credit cards, and offers Newpay, a flexible digital finance product incorporating Buy Now Pay Later and instalment finance that is regulated and requires affordability checks, for both large retailers and SMEs.
Powered by machine learning, NewDay’s leading proprietary credit models enable it to be one of the most inclusive lenders in the UK. NewDay’s deep underwriting capability and 20 years of experience allow it to responsibly say “yes” to more UK customers, making NewDay a merchant partner of choice for leading brands such as AO.com, Argos and John Lewis.
NewDay is authorised and regulated by the Financial Conduct Authority.