Consumers turn to BNPL for flexibility and security as retail prepares for recovery

According to the press release, the report is commissioned by Klarna and examines the role BNPL providers play in the UK, the benefits to consumers and retailers, and the challenges the sector faces as the market continues to grow. The report shows that debit cards are now the most popular form of payment in the UK, accounting for 4 in 10 of all payments in 2019. 

A similar shift is occurring in consumer credit, with credit cards steadily losing share to other forms of credit over the past 10 years. Therefore, as part of the growth of the online payments sector and the shift from credit to debit, new solutions in the form of BNPL products have rapidly risen in popularity. 

Additionally, over 10 million people (one fifth of the UK’s adult population) used a BNPL option to purchase goods online in 2020, with the payment method accounting for nearly 4% of all retail sales made online in 2020. Besides, almost two thirds (64%) of adults that have previously used a BNPL service to make an online payment said that the flexibility had helped them manage their finances. 

If all purchases made through BNPL in 2020 had instead been made on credit cards over the same period, it could have cost consumers GBP 76 million in interest payments alone, excluding missed payments or membership fees. This figure assumes the minimum fee was paid after one month and the balance was paid off after two months. Additionally, some spending is likely to have happened on even higher cost alternatives. 

Regarding retailers,  as focuses shifted online, they sought every advantage in the battle for market share. One such advantage was adding BNPL payment options to their checkout process, something there was significant consumer demand for. Over 9.5 million consumers in the UK noted they actively avoid buying from retailers that don’t offer BNPL as a payment method.