Consumers more likely to use Buy Now Pay Later for Christmas as the cost-of-living crisis hits

When comparing to last year’s spending habits, over half of consumers are more likely to or are already using Buy Now Pay Later (BNPL) services, according to new research.

The data reveals that a quarter of consumers, more conscious of their spending habits during the cost of living crisis, are more likely to use BNPL for festive purchases this year, whilst 27% of shoppers are already using the payment option.

The data also reveals that consumers expect to spend, on average, £293 in total for gifts this Christmas. Over a quarter of consumers are more likely to buy a high-value gift, such as jewellery, if BNPL is offered as a payment option this festive season. In fact, shoppers who plan to use BNPL for holiday shopping are most likely to for larger purchases – on average £325.

With the cost of living crisis mounting, the top three items shoppers would use BNPL for during the festive season are: electronics, clothes & shoes, and toys.

The data also shows that while there has been a gender gap with women more likely to use BNPL, this is levelling out as men become more interested in the payment option this festive season. This trend will continue in 2023, as on average, UK consumers plan to use BNPL for 16% of purchases. For men this rises to 19% of purchases, while for women it drops slightly to 14%. Younger age groups remain the demographic with the biggest uptake of BNPL services, with 16-34-year-olds most likely to use BNPL in 2023, for 30% of purchases.

As the BNPL industry grew quickly and at the beginning of the year, 51% of consumers felt providers needed to be regulated. To better protect consumers, regulations have since come into effect and 37% of consumers say they are now more encouraged to use BNPL services. Regulations and financial literacy support remain important elements of responsible BNPL use, as the data shows almost three in five consumers feel that BNPL encourages them to spend more than they can afford, up from 54% at the beginning of 2022.

Paul Marcantonio, Executive Director UK & Western Europe at ECOMMPAY, who analysed the days, says: “Consumers are expected to be more cautious with festive spending this year as the cost-of-living crisis impacts us all. New payment options will be useful for both businesses and consumers, as we navigate the year ahead. The data shows that consumers prefer choice when it comes to making payments, and businesses must take note or risk losing out on key sales this golden quarter.

As part of this, shoppers are exploring alternative payment methods, such as Buy Now Pay Later (BNPL). While it’s encouraging to see more awareness among consumers of the financial solutions available, BNPL comes with the inherent risk that shoppers can run up debt which may put them into difficulty later. Therefore there is a responsibility for providers to ensure they are carrying the right affordability checks before lending.”