Equifax UK Study Shows ‘Buy Now, Pay Later’ Popularity

USE OF ‘Buy Now, Pay Later’ deferred repayment options is skyrocketing in the United Kingdom, according to new Equifax UK research. In fact, the study indicates a record 28% of the adult population in the UK made at least one BNPL repayment in October 2021, up from 23% in December 2020.

“BNPL is not a new concept; it’s been part of the UK’s credit industry for decades, but it has taken on new forms in recent years that has sent its popularity soaring,” said Jayadeep Nair, chief product and marketing officer at Equifax UK. “For switched-on shoppers who want to smooth out their spending over the festive period, it can be an incredibly useful budgeting tool, and may soon even help those with thin credit files to build up a healthy credit score.”

In the Equifax UK research, data analyzed from 8,700+ current accounts, and 2,000 consumer interviews, drew a detailed picture of buy now, pay later behaviors. Among key findings include:

• Despite rocketing popularity, the total amount repaid by an average user each month has remained stable in 2021, growing only £5 ー or $6.60 in USD ー between December 2020 (£120.35 / $158.98) and October 2021 (£125.32 / $166.55).
• A quarter of 18- to 35-year-olds who bought presents Christmas 2021 were expected to use BNPL to soften the financial blow, with even more (27%), hoping it would help them bag a bargain on Black Friday.
• More than 1 in 10 shoppers expected to use BNPL over the 2021 holiday period, with Black Friday being a major focus. 
• Those most likely to use BNPL on Black Friday and Cyber Monday weekend included young people ages 18-34 (27%), and households earning more than £50K / $66K per year (23%), especially those with the security of full-time income, one in five (18%) of whom were expected to use it on Black Friday.
• One in seven (14%) BNPL users say it will help them make the most of the sales when one month’s salary won’t stretch far enough, while one in four (27%) like having the ability to splurge now, and only pay for items they decide to keep.
• Christmas was also a major driver of BNPL use, with 9% of Christmas shoppers in 2020 using BNPL to spread out the cost of presents. The number expected to do so in 2021 rose to 11% and may end up being higher once all is said and done. 

As the BNPL financing trend continues to grow, Equifax announced in December it has created the industry’s first policy for acceptance of U.S. BNPL tradelines in consumer credit files via Consumer Data Industry Association (CDIA) Metro 2® guidelines. 

Beginning in the first quarter of 2022, Equifax will implement a new “business industry code” for BNPL. This is a standard identifier used to classify the industry in which each Equifax customer functions. The new industry code will classify BNPL tradelines and give Equifax customers and scoring partners the ability to view and decide how to incorporate the information into their decisioning to potentially open up new mainstream financial services opportunities to more consumers.