Around 45% of respondents worry that BNPL services could get them into debt, with 78% preferring a regulated BNPL option over an unregulated one.

In addition, the survey claims that despite 40% of young adults using BNPL loans, 64% of borrowers were unaware that it was a type of credit, while 62% did not know it could impact their credit scores.

The survey was conducted between 27-31 January 2023 and involved 2,000 UK adults.

Chief commercial officer at NewDay Ian Corfield said: “While BNPL continues to be a popular option for younger consumers, its broader appeal is being hampered by a lack of regulation causing mistrust.

“Added to this is a poor understanding of BNPL as a credit product and the potential impacts on credit records. It’s clear more needs to be done to educate consumers, and the regulation of BNPL products needs to be accelerated. But as industry we also have a duty to protect consumers and to lend responsibly”, Corfield added.

Last year and following the worsening cost-of-living crisis, multiple customers began to default on their payments, forcing BNPL providers to underwrite a significant amount of debt.

However, the BNPL sector continues to grow at an alarming rate, with companies such as German BNPL start-up Mondu entering the UK market as recently as March. In February, the UK government launched a consultation to find ways to regulate the troubled sector.

“BNPL is here to stay and greater regulation and protection for consumers will unleash its full potential rather than stifle it”, Corfield concluded.