2022
9
UK Buy Now, Pay Later Financing Market Report 2022
2022-11-03T03:03:20+00:00
OX1100521
2195
157149
[{"name":"Loans and Borrowing","url":"https:\/\/store.mintel.com\/industries\/finance\/financial-services\/loans-borrowing"}]
Report
en_GB
“The buy now, pay later financing market has grown substantially, especially since the onset of the pandemic and the growth in online shopping. The market offers a consumer-centric and flexible…

UK Buy Now, Pay Later Financing Market Report 2022

£ 2,195 (Excl.Tax)

Description

The UK Buy Now, Pay Later Market Report 2022 identifies consumers’ attitudes towards buy now, pay later in the UK, growth in buy now, pay later, and where buy now, pay later in the UK is headed in the near future. This report covers the UK BNPL market size, market forecast, market segmentation and industry trends for the UK BNPL market.

Current Market Landscape

Our UK Buy Now, Pay Later market analysis shows that the market is growing significantly as BNPL providers are extending the reach of this financing option, creating growth in Buy Now, Pay Later. In preparation for new UK BNPL market regulation in 2023, some providers have started reporting data to credit reference agencies.

Consumers value the convenience of the product for easy payments and to manage cash flow, e.g. by using BNPL to split payments, enabling consumers to stay on top of their BNPL finances.

UK BNPL Market Share and Key Industry Trends

Our UK Buy Now, Pay Later market analysis predicts that growth will continue. The introduction of new UK BNPL market regulations will cause providers to adapt their offers and operations, leading to higher costs in some areas.

Banks may be able to monetize on the UK BNPL market by acquiring established providers. New regulations could also impact the number of new entrants as they would have to conform to new sets of rules, meanwhile, some existing firms may choose to leave the market.

Future Trends in the UK BNPL Market

The UK BNPL market will mature and grow further, however, at a slower rate. Innovation will be key in maintaining consumer interest in Buy Now, Pay Later in the UK. Technology advancements in the metaverse will help to enhance consumer-centric services, targeting the convenience that consumers in the UK BNPL market demand.

Providers have a significant opportunity to garner growth in Buy Now, Pay Later by extending use of the product among current users and to new customers. Adopting new technologies, such as virtual shopping experiences, will help to enhance offerings and provide consumers with the human element of the shopping experience.

Read on to discover more details or take a look at all of our UK Banking & Money Transmission Market Research.

Quickly Understand

  • Market background and regulatory overview for buy now, pay later financing.
  • Impact of the cost of living crisis on buy now, pay later financing.
  • Company activity in the UK BNPL market.
  • Use of consumer credit and buy now, pay later financing.
  • Future credit preferences and retail verticals.
  • Perceived benefits of buy now, pay later financing.
  • Consumer concerns over buy now, pay later financing.

Covered in this Report

Brands: Klarna, Clearpay, Monzo, Amazon, Barclays, Fairer to You, Virgin Money, PayPal, Revolut, Laybuy, Flava, HSBC, Natwest, Apple, Deliveroo, and many more.

Expert Analysis from a Specialist in the Field

This report, written by Natasha Hayes, a leading analyst in the Financial Services sector, delivers in-depth commentary and analysis to highlight current trends in the UK BNPL market, and adds expert context to the numbers.

The Buy Now, Pay Later Financing Market has grown substantially, especially since the onset of the pandemic and the growth in online shopping. The market offers a consumer-centric and flexible alternative way to shop. The cost-of-living crisis and growing pressure on household finances will open up the benefits of BNPL to more customers. However, the market needs to tread carefully to ensure it is not seen to encourage people to spend more than they can afford.

Natasha HayesNatasha Hayes
Financial Services Analyst

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • Products covered in this Report
  2. Executive Summary

    • The five-year outlook for BNPL
      • Figure 1: Category outlook, 2022-27
    • The market
    • Estimates vary on the size of the BNPL market
    • BNPL is not a new concept
    • FCA plans new rules for the BNPL market
    • Companies and brands
    • High street and neo banks have entered the market…
    • Tech firms also want a piece of the BNPL pie
    • Klarna launches virtual shopping experience
    • Iceland launches BNPL support for shoppers
    • The consumer
    • One in seven have used BNPL in the last two years
      • Figure 2: Types of credit/borrowing used in the last two years, 2022
    • 7% of consumers use both credit cards and BNPL
    • 30% of BNPL users have cleared their balance
      • Figure 3: Total outstanding balance on buy now, pay later, 2022
    • Two in five repay balances early
      • Figure 4: Buy now, pay later behaviours in the last two years, 2022
    • BNPL holds most appeal for purchases of £100-199
      • Figure 5: Purchase amount that would prompt consumers to use BNPL, 2022
    • Moving home prompts BNPL usage
      • Figure 6: Future payment preferences for purchases, by purchase category, 2022
    • Virtual BNPL cards will drive use
    • Convenience is key for consumers
      • Figure 7: Perceived benefits of BNPL, 2022
    • BNPL enables cash flow management, especially for emergency purchases
    • Impulse spending is the top concern for consumers
      • Figure 8: Consumer concerns about BNPL, 2022
  3. Issues and Insights

    • BNPL offers a convenient option at a time of increasing financial pressure
    • Navigating the reputational risks of the cost of living crisis
    • Regulation will bring long-term stability to the market
  4. Market Background

    • Category Outlook
      • Figure 9: Category outlook, 2022-27
    • FCA estimates the market size at £2.7 billion in 2020…
      • Figure 10: FCA estimations of BNPL market size, 2020
    • …whilst Bain & Company value it much higher
      • Figure 11: UK Market information for buy now, pay later and credit cards, 2021
    • The evolution of BNPL
    • Market growth was accelerated by the pandemic
    • The market is made up of a range of different providers
    • The market has moved beyond online sales
    • Consumers can purchase a range of products through BNPL
    • BNPL helps retailers to increase order values
  5. Payments Landscape

    • Use of debit card for payments continues to rise
      • Figure 12: Payment volumes, by number of payments (billions), 2015-21
    • 5% of consumers use BNPL weekly
      • Figure 13: Payment method frequency, 2021
    • Internet sales fall from pandemic peak
      • Figure 14: internet sales as a percentage of total retail sales, 2007-22
    • Effects of cost of living crisis seen in credit card lending
      • Figure 15: Monthly changes of total sterling net credit card lending to individuals (in sterling), seasonally adjusted, 2012-22
    • Overdraft interest rates have risen since 2020
      • Figure 16: Bank of England quoted interest rates for personal loans, credit cards and overdrafts, 2010-22
  6. Regulatory Overview

    • FCA plans new rules for the BNPL market
    • BNPL providers face advertising rules and warnings
    • Providers ask for proportionate regulation
    • Other countries adopt similar regulatory approach
  7. Market Drivers

    • Inflation is the key concern for consumers and brands
    • BNPL faces challenges as consumer spending power is curbed
    • Rising interest rates will reduce discretionary spend
    • Consumers’ financial wellbeing has fallen from the highs of 2021
      • Figure 17: Household financial wellbeing index, 2016-22
    • Low wage growth will drive demand for short-term credit options
      • Figure 18: Real average weekly earnings (seasonally adjusted), % change year on year – three month average, 2010-22
  8. Company Activity

    • Market is made up of a range of companies, including payments companies and banks
    • High street and neo banks enter the market…
    • …although BNPL poses a reputational challenge for banks
    • Tech firms also want a piece of the BNPL pie
    • Business models come under pressure
  9. Launch Activity and Innovation

    • Klarna launches virtual shopping experience
      • Figure 19: Klarna’s virtual shopping experience
    • Iceland launches BNPL support for shoppers…
    • …whilst Klarna can now be used on Deliveroo
    • Opportunity to use BNPL in circular economy
  10. Brand Research

    • Brand map
      • Figure 20: Attitudes towards and usage of selected brands, 2022
    • Key brand metrics
      • Figure 21: Key metrics for selected brands, 2022
    • Brand attitudes: Klarna is seen as having a good reputation
      • Figure 22: Attitudes, by brand, 2022
    • Brand personality: PayPal Credit and Clearpay are considered accessible
      • Figure 23: Brand personality – Macro image, 2022
    • Consumers perceive Monzo Flex as authoritative and progressive
      • Figure 24: Brand personality – Micro image, 2022
    • Brand analysis
    • PayPal Credit is boosted by familiarity of PayPal brand
    • 79% of Klarna users positively endorse the brand
    • Monzo Flex is well placed to drive repeated business from its customer base
    • Clearpay is struggling to stand out
    • Laybuy is less well-known among consumers
  11. Use of Consumer Credit

    • One in seven has used BNPL in the last two years
      • Figure 25: Types of credit/borrowing used in the last two years, 2022
    • BNPL popular amongst young women
      • Figure 26: Use of BNPL in the past two years, by age and gender, 2022
    • 7% of consumers use both credit cards and BNPL
    • 27% who are struggling financially use BNPL
      • Figure 27: Use of BNPL and credit cards in the past two years, by financial situation, 2022
  12. Use of Buy Now, Pay Later Financing

    • 30% of BNPL users have cleared their balance
      • Figure 28: Total outstanding balance on buy now, pay later, 2022
    • Men more likely to have larger outstanding debts
      • Figure 29: Outstanding balance on BNPL, by gender, 2022
    • 39% pay their balances early…
      • Figure 30: Buy now, pay later behaviours in the last two years, 2022
    • …but two in five shows signs of repayment issues
  13. Amount Spent to Prompt Use of Buy Now, Pay Later

    • BNPL holds most appeal for purchases of £100-199
      • Figure 31: Purchase amount that would prompt consumers to use BNPL, 2022
    • Those willing to spend over £100 like being able to split purchases
      • Figure 32: Perceived benefits of BNPL, by those who would be prompted to use it, 2022
  14. Credit Preferences

    • Moving home prompts BNPL usage
      • Figure 33: Future payment preferences for purchases, by purchase category, 2022
    • Growth in BNPL for essential purchases is expected
    • Virtual cards will drive further BNPL use
      • Figure 34: Use of different forms of credit for selected purchases, 2022
    • Young families most likely to use BNPL
      • Figure 35: Intended use of BNPL – CHAID – Tree output, July 2022
  15. Perceived Benefits of Buy Now Pay Later Financing

    • Convenience is key for consumers
      • Figure 36: Perceived benefits of BNPL, 2022
    • Over-45s more likely to highlight cash flow advantages
      • Figure 37: Perceived benefits of BNPL, by age, 2022
    • …especially for emergency purchases
  16. Consumer Concerns over Buy Now Pay Later Financing

    • Impulse spending is the top concern for consumers…
      • Figure 38: Consumer concerns about BNPL, by use, 2022
    • …and experts
    • Alleviating concerns could attract more consumers to the market
      • Figure 39: Number of concerns raised about BNPL, by BNPL use, 2022
    • BNPL providers have opportunities to build trust
  17. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology
    • CHAID analysis methodology
      • Figure 40: Buy Now, Pay Later Financing – CHAID – Table output, July 2022

About the report

This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

Market

Mintel provides a range of market information, frequently through the category level, including market size and forecasting, complete with market drivers that illustrate the forces that shape a category or market.

Consumer

Mintel’s proprietary consumer research provides our analysts with the attitudinal and behavioral data used to provide valuable insight to topical issues.

Brand/Company

Mintel provides overviews of the top brands and manufacturers, and uses consumer research to explore attitudes and reactions to brands, as well as insight into what will resonate with consumers.

Data

Market reports provide appendices of data to support the research and insight produced. Our databooks* are easily manipulated and downloadable to support your research needs and covers factors from consumer attitudes to market forecasts.

*databooks not available with UK B2B Industry reports.

Below is a sample report, understand what you are buying.

Click to show report
2024 Sample Consumer Cover

Please Note: This is a sample report. All of the figures, graphs, and tables have been redacted. Our reports are available to download in PDF and PPT formats.

Trusted by companies. Big and small.

Want to speak to us directly?

Contact us with your enquiry and our expert global team can help.

Get in touch