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Online shopping on the never-never

Key findings

  • Young consumers and those with dependent children at home are most likely to have used buy now, pay later products.
  • Experiencing stressful events is also associated with use of the products, but so is earning a high income.
  • The proportion of buy now, pay later users who are between 25 and 35 years old has (almost certainly) increased during recent Covid-19 lockdowns.


Buy now, pay later (BNPL) is a product that offers interest-free, short-term loans to spread the payment for retail goods. Many more consumers have used such loans during the Covid-19 pandemic than did so in previous years. The count of active UK users of the Klarna payment app, for instance, rose from about 211,000 in March 2020 to over 713,000 in February 2021.

There has been concern that some consumers may be suffering harm as part of this widespread and rapidly growing use of BNPL. There have been calls for the product's existing exemptions from regulation to be removed and for BNPL to be regulated in the same way as other credit products.

At its best, BNPL may be a low-cost financing option that allows consumers to smooth out the cost of their purchases and to "try before they buy" when shopping online. This may have been particularly useful for buying clothes during periods in 2020 when non-essential retail in the UK was shut. Consumers were able to order each garment in two or three sizes, try them on and then promptly return all but one to the retailer before later staged BNPL repayments fell due.

At its worst, BNPL may be a source of fast and easy credit that allows consumers who might not be regarded as "creditworthy" by regulated providers to run up unmanageable debt quickly.

We have undertaken research to understand who is using BNPL, to inform considerations about proportional regulation.

Youth and caring for children best explain BNPL use

We surveyed more than 15,000 UK consumers and found that 31 per cent of them had ever used BNPL. Age and household composition are the factors most strongly related to use of BNPL, which decreases continually with age and is higher at all ages for respondents with dependent children aged under 16. More than half of the 230 respondents aged between 18 and 24 years who had children living with them reported having used a BNPL service.

The horizontal blue lines on the chart show the overall unweighted percentages who were BNPL users, for each age group.

All else equal, the likelihood of respondents reporting having used BNPL also increased significantly with experiencing recent stressful events and earning higher incomes. The first of these characteristics is an indicator of potential financial vulnerability; earning a high income, on the other hand, may signpost a consumer who is simply unconcerned about taking on relatively small amounts of short-term debt.

Panellists who reported that their day-to-day lives were strongly affected by visual or memory impairments were relatively likely to have used BNPL. There are too few in our sample to draw strong conclusions but, given the nature of the service and that harm may arise if people use it needlessly and then forget to make payments, further research may be useful to understand if such consumers are at greater risk.

Gender, ethnicity, educational attainment and health conditions were also investigated in the analysis but found not to be strongly associated with BNPL use.

Further qualitative insights from the survey

The survey data also suggests that those who first used BNPL during 2020 were drawn disproportionately from people aged between 25 and 35 years. Because respondents were reporting the periods in which they had used different BNPL brands entirely from memory, and some internal inconsistencies arose in their responses, our findings here can be regarded as no more than indicative. However, the large and (strongly) increasing proportion of young consumers in the BNPL customer base raises questions about the role of advertising and social media influencers on platforms like Instagram and Tik Tok in marketing the product.

What next?

The profile of BNPL users built using this survey will allow us and others to research these issues further, unpacking further the experiences of young adults and their families.

The Financial Conduct Authority and HM Treasury have indicated that they intend to consult on the introduction of proportional regulation of BNPL later this year. We will be sharing our findings with them, to shape this consultation and make sure that regulation is designed to protect consumers well.

Contact us

If you have any questions or would like to find out more, please email Steve Brown at consumerinsight@which.co.uk

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