Demand for BNPL (Buy Now Pay Later) solutions rose across all age groups in the UK, as living costs increase
A survey commissioned by UK-based financial education charity the Centre for Financial Capability found that UK customers of all ages are turning to BNPL solutions as they are struggling to meet payments due to rising living costs and soaring inflation.
Although younger citizens are still the group most likely to consider BNPL products, the disturbing fact is that a large portion of the older cohort is turning to short-term financing as well.
According to the survey, 54% of the 18 to 24-year-olds surveyed expect to take out a BNPL loan within a year, a 6% increase year-on-year.
Meanwhile, almost 20% of over-65-year-olds had used short-term loan products or intended to do so in the next 12 months. That almost doubles less than 10% reported last year.
Demand for BNPL products first boomed during the pandemic but it has continued to grow as many people struggle with shrinking budgets affected by high inflation levels. On a global scale, the UK witnesses rising demand for credit solutions of all kinds. Almost half of the British adults are struggling to keep up with at least one bill or credit commitment today.
BNPL loans stand out among other credit offers as they are interest-free if paid on time. At the same time, a growing proportion of customers reported paying late fees.
The rise in BNPL debt is worrisome as the segment is currently unregulated in the UK. Considering the growth of loan frequency and volumes, there is a need to enhance consumer protection. However, the previously laid-out government plans to require providers to carry out affordability checks have not yet materialised in any legal act.
Meanwhile, in the US, where the BNPL demand is also steadily growing, the Consumer Financial Protection Bureau (CFPB) announced plans to tighten up regulation of BNPL firms with the same baseline consumer protections that work for credit cards.