31% of people still don’t think that BNPL purchases can lead to debt. However, this jumps to 51% for those aged 18-24 who are more likely to use BNPL than the UK average. 29% of people remain unaware that BNPL is a form of borrowing, similar to using a credit card. This is significantly higher for younger people, with 39% of 18-24s not unaware of the risks. This is according to research from Creditspring.
Recent figures from Adobe suggest that £3.7bn will be spent via BNPL throughout November and December, with total BNPL spending across 2023 exceeding £17bn. Research ahead of Black Friday last year suggested that BNPL was the third most popular payment option, ahead of cash.
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Recent research from TSB revealed that 42% of people plan to make purchases over Black Friday, with 56% of those spending set to use a credit product. The research also shows BNPL spending spiked over this period last year, with Black Friday spending 77% more than the 2022 average.
Awareness of the risks of BNPL remains low across the board
50% of younger people also did not know that BNPL providers can add extra costs or late fees if payments are missed, compared to a UK average of 41%. 46% of all people were still unaware that they could be referred to a debt collector for missing a BNPL payment. Only 44% of people using BNPL were able to repay loans without issue with 9% admitting that it pushed them into debt.
This misunderstanding is ultimately hurting borrowers. 23% of BNPL users say they feel in control of their spending and 18% have had to use savings to pay off debts such as BNPL purchases.
With continued delays around the regulation of BNPL, shoppers are at increased risk due to a lack of understanding of BNPL products and a lack of transparency from providers. With BNPL payments set to spike during this busy retail period, lenders need to ensure they are protecting borrowers by ensuring that they fully understand the credit agreements they are entering and the risks from missed repayments.
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