Displaying items by tag: buy now pay later

Christians Against Poverty (CAP) supports people in debt and poverty. In recent years Buy Now Pay Later (BNPL) has emerged and become a popular way of making payments online. Consequently CAP welcomes the Financial Conduct Authority’s (FCA) latest consultation to bring BNPL into its regulatory oversight,and is broadly in agreement with all the FCA’s suggestions for exemption areas Including invoicing, trade credit, employer loans and social housing landlord loans. CAP also wants the FCA to ensure that people are fully informed of the risks of using these products, such as late fees. It welcomes pre-contractual agreements for consumers to sign so that they have more time to think about their decisions. Whilst BNPL products are interest-free, CAP wants the FCA to monitor market changes. If consumers are dependent on BNPL to smooth cash flow when fees or charges are applied it could be harmful.

More than 17 million UK customers have now used a buy now pay later (BNPL) company to make an online purchase. The payment method is also set to have its biggest Christmas yet. BNPL firms allow people to manage their shopping, either by postponing their bill for a short while, or splitting it into more manageable chunks over time, interest free. But users too easily end up in debt and tougher rules are needed. Klarna, the biggest UK provider, has seen its customer base double to 15 million since 2020. Other companies, Clearpay and LayBuy, are also expanding fast. The fastest growth is among 40- and 50-year-olds. A recent Citizens Advice survey found almost one in ten plan to use BNPL for Christmas shopping. Citizens Advice urges consumers considering using BNPL to ensure they understand what they are signing up for, how they will make the repayments, and what will happen if they can't pay on time.

Buy Now Pay Later (BNPL) borrowing includes catalogue credit, store cards and retailers finance at the point of sale. New measures require retailers to present BNPL offers more clearly, give adequate explanations of costs and negative consequences; and prompt people when the 0% interest period expires to allow them to repay the full balance before incurring charges. Debt charity StepChange welcomes the modest changes, but doubts whether they will fully achieve their objective. It would like to see a closer look at the use of discounts and incentives, and would like to see continued scrutiny in this area, to ensure consumers are protected against poor practice. Citizens Advice said, ‘The new rules won’t stop people being hit by unexpected costs on unpaid amounts. To protect people better, the FCA should only allow firms to charge interest once the promotional period ends.’