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Buy now pay later pitfalls

The buy-now-pay-later (BNPL) firms have came under the control of the UK financial regulator. It means that BNPL firms will tell some credit agencies about payment behaviours. Good customers making payments on time could see a positive effect on their credit rating. However, customers who fall behind in payments could suffer when applying for a loan or mortgage. Did you know that?


Debt piles

The BNPL boom has fuelled debt fears, with 17m users, including 30% under 30 years old. Consumer groups say BNPL can create unmanageable debts for consumers. On a positive note, BNPL is short-term financing that allows customers to make purchases and pay for them at a future date, often interest-free. Perfect for shopping online.


  1. A convenient way to borrow, without using a credit card. BNPL services have quickly been adopted by retailers, allowing purchases by instalment.
  2. Make ends meet, as household bills rocket. By splitting payments for larger purchases over several months, customers manage the bigger purchases.
  3. Try before you buy shoppers mean buying dresses in several colours or sizes and return the ones they don’t want, paying only for the items that they choose to keep.


  1. Impulse buying can make debt easier, as BNPL is a soft way to borrow money.
  2. Pay more in the long-term, as few people know that late payment fees or higher interest rates are charged for late BNPL payments.
  3. Now a regulated market by the Financial Conduct Authority (FCA) ensuring customers will be treated fairly and only offered agreements that they can afford. Vulnerable customers or those with poor money skills may be excluded.

BNPL has been widely adopted by 20,000 UK retailers and BNPL volumes are expected to grow 29% annually to account for 10% of all e-commerce spending by 2024. Most retailers are small and medium sized enterprises (SMEs) with under £2m in annual turnover, helping the survival of smallest retailers.

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Date: 18 July 2022 by Max Robinson