As a new consumption model, "Buy Now Pay Later" can effectively relieve consumers' financial pressure. However, the British government said that after review, it was found that this consumption model has potential dangers and may even cause consumers to owe huge "loans". Based on this, the British government recently announced that it would include "buy now, pay later" in its regulations and increase supervision of sellers who use this rule. At that time, Klarna, a mainstream shopping and payment platform in Europe, will also be subject to review to protect the rights and interests of consumers.
More than 50% of British people use buy now, pay later
"Buy now, pay later" is a purchase model with no interest, that is, after consumers choose this model, they do not have to pay the full amount immediately, but pay a regular amount every month to ease the financial pressure. Currently, there are hundreds of retailers in the UK that support this consumption model.
With the outbreak of the epidemic, many consumers turned to online shopping, and products that apply the "buy now, pay later" rule were quickly launched online. According to data from the UK Treasury, the online transaction volume of buy now, pay later products increased threefold in 2020, and its market size has reached 2.7 billion pounds. Credit Karma data shows that among consumers under 35 years old in the UK, The proportion of buy now, pay later users is about 50%. In terms of gender, there are more males than females ; in terms of region, consumers mostly live in economically developed London and southeast England. The government has stepped up its supervision
On the surface, buy now, pay later allows consumers to enjoy the goods earlier and extend the repayment period. But it has potential risks and may even put consumers in debt! Data shows that more than 50% of British consumers under the age of 35 regret after paying, more than 60% of young people feel that they have more loans due to increased spending; more than 50% of consumers aged 18-34 miss repayments. It is understood that many consumers do not consider buy now, pay later as a credit model, so they do not conduct risk reviews. The reviews of credit reference agencies often focus on assessing retailers rather than consumers' affordability. Under this model, although the average transaction price is often lower, consumers need to sign multiple agreements with different retailers and take on huge loans. John Glen, economic secretary of the UK Treasury, said: "The review found that this consumption model is more likely to generate debts of about 1,000 pounds, which is not monitored by credit reference agencies and mainstream lenders." Therefore, the government decided to include "buy now, pay later" in regulations, supervise the behavior of "buy now, pay later" sellers through the Financial Conduct Authority (FCA), and allow people to escalate complaints to the "Financial Ombudsman Service" when problems arise, thereby reducing the risks of purchases. Under the plans, retailers will be subject to FCA rules, which will require sellers to monitor lending practices and ensure fair treatment, especially for vulnerable consumers or those struggling to repay loans. Cross-border e-commerce market U.K. Consumption Patterns |
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