A new study indicates the online bank Monzo has recently transformed into a major provider of buy-now-pay-later (BNPL) credit, going from almost zero to 20% of the market in one year.

The findings, contained in a new report by credit technology company Render, indicate the success Monzo has had in offering its ‘Flex’ BNPL product to existing customers, which allows any Monzo customer to spread the cost of any payment, regardless of whether the merchant offers BNPL or not.

The Render Report also uncovered that BNPL transactions do not routinely appear on credit histories, despite being a form of debt. Of the more than 7,500 customers whose anonymised data was analysed between 2022 and 2023, and who were known to be using BNPL, 51% did not have it on their credit reports.

The Render Report found the average transaction count had gone up for all age groups among BNPL customers

This suggests that BNPL is being used to fund more, smaller purchases rather than large single-ticket items. This suggests the increasing adoption of BNPL for routine expenses.

The Render Report was produced by surveying anonymised Open Banking information of people who consented to share their data whilst applying for a loan via Render’s sister company, the B2C lender Abound.

Gerald Chappell, CEO and Co-Founder of Render and Abound, said: “Open Banking uncovers insights not found in traditional credit checks, such as the use of BNPL and even the frequency of problem gambling. The absence of BNPL transactions on the majority of credit reports studied is particularly striking as it means that lenders who do not use Open Banking data are tossing the coin on whether the indebtedness of their customers is accurate, which could lead to debt accumulation. We hope by sharing these insights we encourage a debate about what the future of responsible lending should look like.”

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