Debt advisers are warning about a surge in unregulated ‘buy now, pay later’ credit as UK consumers increasingly turn to these deals to purchase everyday essentials. The amount spent using such deals has risen to £1.7bn a month, prompting calls for government intervention to regulate the sector.
The ‘buy now, pay later’ market has expanded more than fourfold since 2020 and is projected to reach a record total of £30bn this year. Campaign groups are urgently seeking measures to oversee and control the sector.
Morgan Wild, interim director of policy at Citizens Advice, expressed concern over the lack of regulation, stating that the use of ‘buy now, pay later’ has surged, leading to an increase in people seeking help to repay their debts. Many individuals require emergency support, such as food bank vouchers, indicating a failure on the part of lenders to protect people from unmanageable debt risks.
According to figures from Adobe Digital Insights, ‘buy now, pay later’ deals accounted for over £1 in every £7 spent online in the first three months of 2024. In 2023, the total online expenditure under these deals was £16.7bn, with monthly spending ranging between £1.09bn and £1.75bn. An additional estimated £9bn was spent in physical shops offering ‘buy now, pay later’ facilities in the same year.
The option to defer payments has been available for more than a decade, but its popularity increased during the pandemic as people relied more on these deals when faced with financial challenges.
