Calls for Enhanced Consumer Protection as BNPL Accounts for 12% of UK’s January Spending

UK online spending totaled £8bn in January, with ‘Buy Now Pay Later’ (BNPL) services covering more than £1bn.clearly Adobe.

The cost of living crisis has forced UK consumers to assess their spending habits, look for new ways to budget and consider BNPL. A UK consumer spent a total of around £8 billion online in January 2023, according to Adobe Analytics data.

A variety of factors, including higher interest rates, have pushed the average cost of purchase higher, suggesting that UK customers are much more price sensitive than they used to be.

Adobe data also highlights the increasing use of BNPL in the UK. A consumer used his BNPL on his 12% of online purchases to spread the costs over months. Despite the decline in spending since 2022, BNPL usage increased by 1.3% compared to January 2022.

Online BNPL’s average order value in January also increased by 18% year-on-year, indicating that more consumers are turning to the service for more expensive items. The main drivers of these changes in the UK appear to be the continuing high level of inflation and the cost of living crisis.

Suzanne Steele, vice president and managing director at Adobe, said:

Suzanne SteeleVice President and Managing Director Adobecommented on trends in the data.

Mr Steele said: This shows that the post-Christmas sales period is still very important for both retailers and shoppers.

bank of england The good news in the medium to long term is that inflation may have peaked. short term. “

Stronger laws needed to protect consumers

As BNPL services continue to expand, there are concerns that consumer protection is inadequate.

Samir Peet Adobe BNPL UK
Sameer Pethe, Partner at Kearney

Sameer Petea partner of a business consulting firm Kearney, explains that the industry needs to do more to protect its customers. Pete said:[The] News from Adobe Research underscores the underlying factors that fueled BNPL’s growth. It also shows, more broadly, that embedded finance is here to stay. Our research consistently shows that millennials and Gen Z prefer to spend credit in ways that don’t show up as credit.

“It is not surprising that the current economic environment has led to increased use of BNPL in the UK. increase.

“On the other hand, the same factors also act as headwinds, as higher funding costs, higher impairment losses, and slower consumer discretionary spending impact BNPL players’ revenues and earnings. While boosting adoption, the industry needs to ensure it protects its customers.The industry needs to assess the affordability and suitability of its products.

“Concerns about consumer debt are reasonable, but the sector is well aware of the risks and is working to address them. We hope to see new legislation introduced covering issues such as data sharing with institutions, guidelines on tolerance and collection.

“The bill was supposed to be published by the end of last year, but has not yet been published. Given the vast scope of the regulatory change agenda (such as the Edinburgh reform), the delay in BNPL legislation is not surprising.”

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