Despite growing calls for regulation and some demographics turning their back on credit, Buy now, pay later (BNPL) schemes were the fastest-growing online payment method in the UK last year, according to a Worldpay report.
According to the report BNPL schemes are predicted to account for 10% of UK e-commerce spending by 2024.
Overall, BNPL spending in the UK will balloon from £9.6 billion in 2020 to £26.4 billion in 2024, the research predicts.
It said 2020 “catapulted payments years ahead of where they were projected to be”, with rapid digital changes taking place against the backdrop of the coronavirus pandemic.
Pete Wickes, general manager, Europe, Middle East and Africa at Worldpay from FIS, said: “Buy now, pay later services continue to appeal to consumers’ thirst for seamless user experiences.
“The payments landscape is evolving at pace to respond to consumers’ drive for convenience and the ability to have more flexibility in their purchasing decisions.
“We predict that the BNPL sector will not slow down, with the UK market seeing double-digit expansion over the next few years.
“As this happens, it’s important that the frameworks that govern and protect consumers and merchants also adapt to ensure that there continues to be trust and reliability in payments technology.”
The report, covering 41 countries, said the UK’s e-commerce market is currently the third largest, behind China and the US.
By 2024, it predicts that more than 20% of all purchases in the UK will be made online.
The UK e-commerce market reached £192 billion in 2020 and is expected to grow to £264 billion by 2024, the report found. This follows 13% growth from 2019 to 2020.
Online sales growth continues to be driven by mobile shopping, and in three years’ time the report predicts that 40% of all online shopping in the UK will be done via mobile.
In early February 2021, it was announced that BNPL credit agreements will be regulated by the Financial Conduct Authority (FCA) following a surge in shoppers turning to such products during the coronavirus pandemic.
Nevertheless, the report said BNPL services were the fastest-growing online payment method in the UK for the second year in a row, and this trend is expected to continue over the next four years.