The majority of consumers use BNPL because they want to offset the risks of online shopping – which is set to increase in the future
True cost of “traditional” credit puts UK consumers at risk. Source: pexels.com
Klarna’s quarterly global Pulse in the UK almost half (48%) of consumers shop online at least once a week, up 26% from Q1. That is leading to a shift away from cash and towards credit and debit cards, and other alternative payment methods.
With the shift towards online shopping continuing, Klarna’s Pulse report highlights the challenges consumers face when it comes to using credit cards. For instance, over a quarter (26%) of Brits do not know how much interest their credit card charges, while 15% only pay off the minimum amount each month. Along with that, 23% have incurred unexpected credit card costs.
The majority of UK consumers (66%) own at least one credit card, with 23% of them using it as their main card for purchases and 43% for emergencies or sporadic high ticket purchases. However, almost two-thirds (59%) would rather go to the dentist or do household chores than read their credit card’s fine print or work out the cost of its APR. Surprisingly, this is particularly true for those with a high interest in personal finance.
When it comes to payment preferences, a quarter (26%) of UK consumers have used BNPL, enabling them to defer payments or pay in installments.
Almost 4 in 10 (37%) feel shopping online can be risky. In fact, more than 6 in 10 (62%) of those who use BNPL said that the main benefit of paying after delivery is to be able to check a product before paying, while almost half (45%) of BNPL users said paying only for the products they keep was one of the main benefits.
Interestingly, the research also found that while most people have heard of BNPL (85%), only a quarter (26%) have actually used it, explaining the high level of confusion about how BNPL works among non-users. A quarter (24%) of people who hadn’t ever used it thought BNPL attracted high interest, despite none of the new breed of BNPL companies charging interest and Klarna charging neither interest nor fees on BNPL products
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