More than 80 per cent of UK consumers agreed that credit checks on financial history should be carried out before a customer can access Buy Now Pay Later (BNPL) products.
A survey of 2,000 UK consumers from BNPL provider Laybuy found that when asked which financial products they identify as a credit product, BNPL was more consistently identified (73 per cent) as a credit product than other more traditional forms of credit such as overdrafts (70 per cent) or mortgages (69 per cent).
The top result was credit cards, which 87 per cent of respondents identified as a credit product.
Presented with the choice between a hard or soft credit check before using BNPL services, there was strong support for both, but slightly greater support for soft credit checks (75 per cent) compared to hard credit checks (63 per cent).
Additionally, when asked whether BNPL should report usage of their products to other credit companies, a large majority (71%) agreed that sharing the information is necessary.
Laybuy, the leading Buy Now Pay Later (BNPL) provider, has today published new research to understand consumer views on credit products following the Government’s recent consultation on future regulation of the sector.
Additionally, when asked whether BNPL should report usage of their products to other credit companies, a large majority (71 per cent) agreed that sharing the information is necessary.
Finally, when asked when they thought it was best to carry out hard credit checks. The most popular answer was that it should take place when opening an account (48 per cent).
Half (50 per cent) of respondents had used BNPL as a payment option. By income, the groups most likely to have used BNPL as a payment option were those in the £60,000-£79,999 and £80,000-£99,999 income brackets (58 per cent). Those on the lowest incomes (less than £20,000) were the least likely to have used BNPL (41 per cent).
When asked about how frequently they used BNPL products, the most common response was less than once a year (35 per cent).
On the other hand, only 5 per cent said they used it weekly. This number jumped to 13 per cent with those aged between 18-24; by age, this group claimed to use BNPL products the most, with 28 per cent using BNPL at least once monthly.
Conversely, frequency of usage was consistently lower with older age groups, especially those aged 45 to 54 (7 per cent using monthly) and those aged 65+ (54 per cent used it less than once a year).
Among those who hadn’t already used BNPL, 25 per cent said they would consider using it in future. Those aged 18-34 were most receptive to the idea of using BNPL in future.
Commenting on the results, Gary Rohloff, managing director and co-founder, Laybuy said: “BNPL is growing in popularity and for many customers, it is a far better way of budgeting than credit cards. However, responsibility is crucial. Just because there is no interest on BNPL, we should never forget that this is a credit product and consumers have the right to be protected.
"It is pleasing to see that many of the measures we have taken including hard credit checks are widely supported by the public at large. The Government’s consultation has now been published - it’s important we use this opportunity to raise standards across the board.”
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