Buy Now Pay Later hits record high at Christmas

Over a third (34%) of UK shoppers have now used Buy Now Pay Later (BNPL) services to spread the cost of purchases, and thousands chose to use BNPL for the first time over the 2022 festive season.

The latest barometer reading reveals how the cost-of-living crisis and shifting shopping habits are influencing the use of high-cost short-term credit.

The research found that one in three (34%) Brits have now used BNPL services, up from 26% in November 2021, suggesting that 4.1 million people chose to use the payment method for the first time in 2022.

This year-on-year spike does not appear to be a consequence of the cost-of-living crisis. Equifax’s research found the opposite is true; and that across all major product categories, inflation is more likely to reduce BNPL spending than increase it.

December is traditionally the busiest month of the retail calendar, and despite a slower than usual Black Friday period for retail sales, Equifax’s study found that more than 1 in 10 (11%) people expected to use BNPL for their Christmas shopping, and a similar number (12%) will use it in the January sales.

In fact, 38% of this group say they would’ve struggled to afford Christmas without it. It was a similar story in 2021 with 9% saying in November they would rely on BNPL to cover at least some of their Christmas shopping.

Equifax reveals that in January last year, there were 15% more shoppers making regular BNPL repayments than there were during October 2021.

Jayadeep Nair, chief product and marketing officer at Equifax UK, said: “Buy now pay later has become a pervasive part of the shopping experience. As with any form of credit, when shoppers use it responsibly it can be a great budgeting tool to help manage extra spending over the festive period.

“As BNPL is a form of credit, it now appears within consumer credit reports, which can be viewed by lenders. This may impact lending decisions, therefore BNPL should be used with this in mind.”

“Shoppers do need to be wary of using BNPL to overstretch themselves especially if spending is being driven by wider social pressures.”