Number Of Customers Using ‘Buy Now, Pay Later’ Services Doubled In A Year
02 Mar 2020
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- The number of people using ‘buy now, pay later’ services to make online purchases has almost doubled in the past year.
- Experts have credited the increasing popularity of the payment method to the ease of convenience it offers in the online marketplace to Gen Z consumers who are more prone to making snap purchases.
- Taking too much debt through such payment schemes could put a borrower in great financial difficulties if they fail to make timely repayments, experts have warned.
Experts have previously voiced their concerns about the impact
of increasing demand for ‘buy now, pay later’ borrowing services, and it has now emerged that online customers in the UK increased their consumption of the services by 39% in the last year. Through ‘buy now, pay later’ schemes, consumers are able to buy goods and services without paying the entire price at the time of making the purchase, usually by obtaining an interest-free installment plan. Some of the most popular companies providing this service in the UK include Klarna and Afterpay. By having access to such facilities, customers are able to make purchases that they would usually not be able to afford due to the high lumpsum cost. During the past year, the number of people who had used Klarna’s ‘buy now, pay later’ services almost doubled compared to the figures reported a year prior, according to the company’s records, reaching seven million users. However, as experts have cautioned in the past as well, such schemes must be used only when the buyer is absolutely sure they would be able to service the debt in due time. Experts believe borrowers must not ignore the risk
that debt carries with itself, especially if it piles up with time. According to Caroline Siarkiewicz, who works at Money and Pensions Services as its chief executive, in case borrowers using such services fail to make a payment on time, they risk losing inexpensive borrowing opportunities in the future due to a low credit score. According to her, since these schemes are easy to access and very straightforward to obtain, younger people consider them attractive funding sources without paying adequate attention to the debt burden they take upon themselves. A report published by Worldpay highlighted that the market share currently enjoyed by ‘buy now, pay later’ services in the country would double by 2023 as far as online purchases are concerned, compared to figures reported in 2019. The report also highlighted the fact that younger consumers are more inclined to make snap purchases, and hence more likely to increase their use of such services in the coming years due to the convenience it offers in their buying experience. The Worldpay report concluded that buy now, pay later currently is the fastest method of payment for online purchases in the country, compared to other popular payment methods like bank transfers and digital wallets. However, digital wallets are definitely here to stay, as per the report, especially when it comes to in-store purchases. By 2023, digital wallets are expected to account for over 50% of all online payments.