There are so many reasons why Brits are turning to buy now, pay later (BNPL) when they shop.
It could be for a snuggly new coat or a replacement for your dingy dining room table that you just can’t wait until payday for. Or, maybe you want to try several sizes of the same item on before you part with your pennies.
These are just some of the benefits of shopping with BNPL services.
BNPL services differ from traditional forms of credit (such as credit cards) and don’t normally involve interest payments (some options, like Klarna’s finance, do charge interest). Depending on the service, the provider will run a hard or soft credit check – be aware that a series of hard checks in a short space of time can affect your score – and some services charge late payment fees. It’s also important to be aware that BNPL doesn’t offer the same level of protection on your spending that credit cards provide.
Make sure you understand the small print before signing up. To help, we give the lowdown on the main services here.
Currently the most popular BNPL service, Klarna offers shoppers three ways to buy now, pay later:
Sister to the popular Aussie brand Afterpay, Clearpay has been making waves on the UK payment scene.
Aimed at millennial spenders who prefer debit to credit, Clearpay is designed to offer flexible payments without the risk of getting into debt. The company assigns spending limits based upon a customer’s previous usage of the service and charges no interest.
Laybuy lets you take your goods there and then, paying for it in six easy instalments. The company offers payment plans with no sign-up fees and no interest, which means you only pay the original price of your order.
Payl8r lets shoppers pay on their own terms by offering the following payment plan options:
DivideBuy allows users to spread the payment of their purchase into equal chunks over the course of a specified time period. The first payment is due at the time of purchase and the rest of the total will be charged every month until the payment is made. A payment term can be between two and 12 months.
Zilch is a virtual card that allows you to buy now, pay later at thousands of retailers, allowing you to buy products when you want them and spread the cost of these items over four instalments in six weeks.
Before signing up to use BNPL, remember that it is a form of credit and it’s crucial that you repay what you owe in full and on time. Always check the terms and conditions carefully to understand whether you could be charged late payment fees and keep an eye out for notifications from your provider that tell you when a payment is due.”
Finder conducted a survey in July 2020, asking 2,000 Brits why they chose to use BNPL platforms. Ease and convenience is the number one factor, with the ability to spread the cost of purchases over a longer time period coming in at second.
This will depend on the pay later scheme you choose to use:
At the moment, they’re not. The Financial Conduct Authority (FCA) announced in early February 2021 that BNPL services would face stricter rules going forward, much like traditional forms of credit.
However, so far, the regulation still isn’t in place.
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