Buy Now Pay Later (BNPL) services have gained much popularity over traditional credit cards, especially as countries suffer high inflation and move closer to recession. BNPL, as a payment option, allows customers to purchase items and pay for them in instalments, often interest-free. In the United Kingdom, the use of BNPL services has risen by 39% in the past year alone, according to a report by The Guardian.
The UK government has unveiled draft legislation to bring the rapidly expanding ‘buy now, pay later’ (BNPL) sector under the Financial Conduct Authority’s (FCA) regulatory oversight, strengthening consumer protection measures. The draft legislation results from a two-year consultation process presented by the UK Treasury, which seeks to grant the FCA authority to regulate companies offering specific interest-free instalment credit options to consumers. This move addresses growing concerns about potential consumer harm from the unsecured credit market.
Currently, most BNPL firms and their products operate outside regulatory purview, leaving borrowers needing the consumer protections typically incorporated into regulated consumer lending products. If the proposed regulatory framework is implemented, BNPL providers would need authorization from the financial regulator and adhere to various regulatory requirements and consumer credit rules, such as the forthcoming Consumer Duty and financial promotions regime. In rule violations, the FCA would possess the power to enforce corrective actions against the offending firms.
However, like any financial product, BNPL services have pros and cons, and it is essential to understand them before deciding whether to use them.
The top 10 companies in the BNLP space, along with the number of online retailers they serve, are as follows:
These companies showcase the diversity and reach of the BNPL market, providing customers with convenient and flexible payment options to meet their individual needs.
In conclusion, BNPL services can be a valid payment option for those who want to spread the cost of their purchases. TAMI, a market intelligence and sales lead generation company, can help BNPL companies connect with their ideal customers, thereby driving customer acquisition and growth. By employing TAMI’s expertise, BNPL providers can ensure they reach the right audience and continue to expand their user base in an increasingly competitive market.