Tech

67% of consumers fail to investigate BNPL providers before buying

Despite the exponential growth of the BNPL market, many consumers do not seem to know what they are signing up for.

Growing BNPL market

Britain BNPL market It is estimated to be worth £ 2.7 billion in 2020, leading to a total of £ 246 billion in consumer credit. This is a rapidly emerging market, currently accounting for 1% of the UK’s total credit industry, and states that 1% of consumers (about 5 million people) have used BNPL products since the start of the pandemic. .. Consumers spend more than their own means.

However, according to a survey by Butter, the UK’s leading Buy Now Pay Later (BNPL) platform, 64% of consumers were neither more likely nor less likely to use the BNPL platform than they did before the pandemic. .. In fact, 20% are less likely to do so, and only 11% say they are somewhat or much more likely to spread the cost of payments.

However, one of the concerns raised regarding the BNPL space is the lack of industry regulation and the industry associations that oversee such regulation.

Lack of consumer awareness

There was a question about how BNPL is being promoted to consumers.Especially: What do customers understand? BNPL Does it really mean? Is a sufficiently affordable valuation carried out before the credit is issued? And is there a consistent and fair approach to how BNPL providers treat financially distressed customers?

Butter’s research also suggests that such regulations are warmly welcomed by consumers and help build confidence in the BNPL sector.

Ninety-four percent of respondents surveyed by Butter said transparency regarding credit or additional charges or fees when making a transaction to buy now and pay later was very important.

However, only 33% say they surveyed the best providers before committing to buy, and because of the lack of regulation, many may choose people who aren’t doing business with consumer interests at their core. Suggests that there is.

In addition, 67% of consumers are more likely to use the Buy Now Pay Later platform because they know that the sector is fully regulated. In short, these steps are in the best interests not only for consumers, but also for those working within the sector. ..

Butter is the first and only FCA-regulated BNPL platform currently in operation in the UK, but fortunately, the UK Government has started with arranging formal industry consultations to create a balanced proportional regulation of BNPL. We promise to introduce it fully. What should these regulations look like?

How BNPL can add value to consumers

Timothy Davis, co-founder and chief executive officer of Butter, commented:

“The interest-free BNPL platform is specially designed to make the purchases people need in a more affordable way and won’t tempt them to make purchases that they can’t buy. This is a significant difference, like Butter. If the BNPL provider does this properly, it will add great value to the consumer’s journey.

However, it is unacceptable for such a rapidly emerging sector to face little or no formal scrutiny, and unfortunately, the people working within it put consumers in their own financial interests. In search of exploitation for, it imposes exorbitant fees in that form, for example, of late fee repayment fees.

That is why we commend the government’s increasing efforts to ensure that consumers are treated fairly. As leaders in this field with models built on transparency and fair lending, we want to eradicate the poor practices of a small number of people and educate consumers to understand BNPL’s proposals. thinking about.

It is important that the government continue to promote a comprehensive framework, as this can only be fully implemented once the sector is regulated.

That said, we want them to go one step further. The BNPL space is growing tremendously, and such a high-growth and unique sector requires an independent regulatory body that can properly manage practices. “



67% of consumers fail to investigate BNPL providers before buying

Source link 67% of consumers fail to investigate BNPL providers before buying

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