Buy Now, Pay Later (BNPL) services continue to see significant growth across the UK and European markets. Over 19m UK consumers have used BNPL services, including 40% of credit cardholders. This is according to Auriemma Group’s latest issue of Cardbeat UK.

The top two providers are Klarna and Clearpay, with these two attributed to much of the growth. As of mid-2023, 51% of BNPL users have used Klarna before, while 47% say it is their preferred provider. Use of Clearpay remains notably lower, with 24% of BNPL users trying the service, and 10% preferring it over other providers. The BNPL experience is overwhelmingly positive for those who have used the service. 91% BNPL users say they had a positive experience using it.

Expected regulations puts BNPL in the spotlight

While expectations of regulation coming to the sector have placed a spotlight on BNPL practices, discussions have not dampened customer appetite for BNPL. New providers continue to enter the marketplace whilst established players continue to increase their investment and focus on service enhancements. Klarna recently confirmed an intention to continue investing in the UK market despite calls for tightened regulation.

Growth continues with the younger generations, 54% of credit cardholders under 35 have used at least one BNPL plan. There is increasing evidence that the relevance and appeal of BNPL has broadened. The UK Finance Payment Market Report found that the percentage of pensioners now using BNPL services doubled in 2022 compared to the previous year.

Similar trends are being seen in other European markets. Germany reported 30% growth in BNPL use in the last year. Around one-quarter of consumers in Europe are believed to have made a purchase using BNPL with annual growth rates forecast in the 20%-40% range by most industry observers.

Simon Cottenham, Head of International Partnerships at Auriemma Group: “UK banks and traditional lenders are beginning to recognise that BNPL is here to stay as a way for consumers to pay. The key for these players is to create a product, value proposition and customer journey which can appeal in this competitive marketplace.”

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