25% Of UK BNPL Users Incure Late Payment Fees, the report reveals
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A survey by the Centre for Financial Capability, an education charity, discloses that almost a quarter of individuals who have used the Buy now pay later (BNPL) services are charged late payment fees. Despite these late payment charges, more people still find purchasing goods and services a more convenient option.
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The Use Of Buy-Now-Pay-Later Services Has Increased In Recent Times
The use of Buy Now Pay Later services has surged recently. According to the charity’s survey, one-third of adults in the UK have now utilized these services, a 40% rise for individuals between 18 and 34. Amongst those who have used or are planning to use BNPL services, 17% used these services to pay for additional expenses during Christmas. At the same time, 25% said that their main reason for using BNPL services is inflation and the rising cost of living.
Users Face Several Issues In The Repayment Section
The charity cautions that, even though BNPL generally does not charge interest, users face late fees and adverse effects on their credit scores. About 25% of individuals who have utilized BNPL have failed to make one or more repayments in the past six months, with 34% between the ages of 18 and 34.
Providers Are Not Obligated To Run Some Checks On The Users
The center stated that since the sector has no regulator, the providers don’t have to run affordability assessments and background checks on the users. This will allow people to accumulate more bills through separate late payments to these schemes.
Pervasive Risks in Buy Now, Pay Later Schemes
According to Jane Goodland, a trustee at The Centre for Financial Capability, these figures show that Buy Now, Pay Later schemes are ongoing, and users are exposed to dangerous financial risks in this unregulated market. With the current cost-of-living challenges continuously affecting the British public, many users turn to these schemes without fully recognizing the associated risks.
Urgent Call For Awareness And Regulation
Surprisingly, the organization’s recent research shows that many people using these schemes face challenges such as poor credit scores, late payment fees, and even getting calls from debt collectors’ agencies. This underscores the need for increased awareness and potential regulatory measures to safeguard users from the pitfalls associated with BNPL services amid the ongoing cost-of-living challenges in the country.
