Buy now pay later (BNPL) statistics
Here's what you need to know about the rise of buy now pay later services in the UK.
Buy now pay later (BNPL) is currently the fastest-growing online payment method in the UK, with a growth rate double that of bank transfers and more than triple that of digital wallets. Buy now pay later is a service that allows consumers to shop online and place and receive orders while paying for them later.
We carried out some research to see if buy now pay later providers are disrupting the credit card industry and how we pay for products.
What are the most popular buy now pay later companies?
In the first half of 2022, BNPL apps have reached almost 10 million downloads on the Google Play store and Apple’s App Store.
In the UK, Klarna is the most popular BNPL company. In September 2022, the app was downloaded 194,388 times in the UK, and in 2021, its services were used by 150 million customers worldwide.
|Year||Klarna downloads in the UK|
Other than Klarna, there are many other UK BNPL platforms that are growing in popularity. Clearpay is the second most popular BNPL platform, having been used by 25% of BNPL customers in 2021, up from 16% in 2020. These are the 2 most popular BNPL apps, with almost two-thirds (61%) of all BNPL users having bought an item with either one of these platforms.
Openpay (8%), Laybuy (7%), Zilch (7%), Payl8r (4%) and Zip (6%) are other popular buy now pay later platforms, all except for Payl8r saw an increase in their customers in 2021 compared to 2020.
What generation in the UK uses BNPL the most?
According to our research, younger generations are far more likely to use buy now pay later services. The generation using BNPL the most is millennials (1981-1996), with 54% using this online payment method. Generation Z is also following this same trend, with 50% saying they use buy now pay later. It’s no surprise that younger generations can’t seem to get enough of BNPL. Klarna, Clearpay and Laybuy are all highly active on social media, marketing themselves to millennials and generation Z through organic and targeted ads to great effect.
Older generations are also using buy now pay later methods, but not to the same extent. For example, only 23% of baby boomers and 12% of the silent generation use these services.
|Generation||Proportion using BNPL|
|Generation Z (1996+)||50%|
|Generation X (1965-1980)||37%|
|Baby boomers (1946-1964)||23%|
|Silent generation (1928-1945)||12%|
Young shoppers are likely to pay off their BNPL purchases through added borrowing. Over half (51%) of those aged between 18 and 34 years, 39% of 35- to 54-year-olds and 24% of those aged 55 and above have borrowed money to pay off a BNPL debt.
The most popular way BNPL consumers pay off their BNPL purchases is through the money in their current account (52%). Roounding out the top 5 ways to pay off a buy now pay later purchase is by using a credit card (26%), using their savings (23%) and using a bank overdraft (9%).
Just under 1 in 10 (7%) of BNPL consumers have borrowed money from friends or family, 6% have taken out a personal loan, 1 in 20 (5%) have turned to a payday loan and 3% have used a guarantor loan to pay off a purchase.
|Type of borrowing to pay off BNPL purchase||Percentage|
|Money from their current account||52%|
|Borrowed from friends/family||7%|
What type of products do people in the UK purchase through BNPL?
One-third (33%) of BNPL customers have used the service to purchase casual wear clothing. With many online fashion brands such as ASOS, boohoo and SHEIN accepting BNPL services, this is a popular way to afford clothing, especially for the younger generations. After casual wear, eating out is not far behind with 31% of consumers using BNPL to pay for trips to restaurants. These are followed by beauty products, with one-quarter (26%) of consumers paying for these using BNPL services.
Technology purchases (22%), travel (19%) and home improvements (19%) follow. Perhaps worryingly, 14% of consumers use BNPL to pay for their rent.
Why do shoppers use buy now pay later services?
We also analysed the main 6 reasons why shoppers are using buy now pay later services. Our data shows that the main reason that people are using buy now pay later is because of its ease and convenience (44%). The ability to spread costs over time is the next most popular reason (41%), followed by interest-free payments (39%) and the ability to pay for purchases that individuals couldn’t afford otherwise (30%).
|Why do shoppers use BNPL services||Percentage|
|They're easy and convenient||44%|
|I can spread costs over a longer period of time||31%|
|To access interest-free payments||39%|
|To pay for purchases I couldn't otherwise afford||30%|
|To try on items that are delivered to me before I am charged for them||28%|
|I don’t want to use or take out a credit card right now||27%|
Criticisms of buy now pay later
The offer of interest-free instalments and no hidden fees allows shoppers more flexibility but also can lessen their perceived risk of debt and lead to overspending and ensuing problems. This has drawn criticism for the BNPL industry from the media and certain charities.
Finder research found that 41% of those who are increasingly using BNPL cited the ability to spread the cost of payment over time as a key factor, while 30% claimed to use it to pay for purchases they can’t otherwise afford.
The FCA is not currently regulating BNPL services (beyond those offering finance) but has said that consumer credit is 1 of 5 priorities for its Business Plan in 2020-21, so it is likely to be monitoring what happens in this area.
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Klarna to introduce late fees in the UK
Klarna will start charging UK customers for late payments from March 2023.Read more…
Zopa to acquire buy now, pay later provider DivideBuy
Zopa is buying DivideBuy in its first acquisition since signalling a move towards offering BNPL.Read more…
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