Older generations turning to buy now, pay later as usage soars
Finance watchdog raps providers over their small print as it reveals a rise in BNPL.
A surge in those using buy now, pay later (BNPL) in the UK includes a significant rise in older generations turning to this type of credit, research shows.
The finance watchdog, the Financial Conduct Authority (FCA), recently issued figures showing that 27% of UK adults had used BNPL – which lacks the consumer safeguards of other types of credit – at least once in the 6 months before January 2023. This was up from 17% who’d used it during the previous 12 months in May 2022.
Research by the comparison site finder.com earlier this year revealed that usage among older generations doubled between February 2022 and February 2023. In the survey, 18% of those aged 55+ said they’d used BNPL – and half of these had first used it in the previous 12 months.
What is buy now, pay later?
BNPL is short-term credit, where you repay in instalments, typically over a few weeks or months, interest-free. But it’s been criticised because many people using it don’t see it as borrowing money and can get into debt easily, and it’s not always clear what happens if you miss a payment.
The FCA found that those who use BNPL frequently are more likely to be in financial difficulty. In its research, those who’d used BNPL more than 10 times in the previous year were almost twice as likely to have increased the amount they owed on credit products over the previous year (51% vs 27%), for example.
BNPL customers lack protection
BNPL isn’t regulated, unlike other types of credit, such as credit cards. So, providers don’t have to make proper affordability checks before giving people credit, and consumers can’t use the Financial Ombudsman to complain if things go wrong. Moves to regulate the sector have so far stalled.
Despite this, the FCA does have some leeway to make changes if it believes agreements are unfair under its powers to make financial terms fairer and clearer.
The watchdog revealed that under these powers, it had secured changes from payment service PayPal and the TV shopping channel QVC. The changes made their terms about continuous payment authority (CPA) easier to understand. With a CPA, you allow a company to take at least one payment from your credit or debit card. PayPal also improved its terms relating to refunds if a customer cancels a purchase.
About the author
Liz Edwards is editor-in-chief at finder.com. She’s been a consumer writer and editor for more than 20 years, led award-winning teams at the campaigning publisher Which?, and has covered a range of consumer rights and personal finance topics, including pensions, credit, banking and insurance. Liz has appeared frequently in national media such as The Sun, Metro, HuffPost and The Independent. She loves to cut through waffle to give consumers the real lowdown.