Buy Now, Pay Later Soars in Europe Amid Regulatory Chatter

Buy Now, Pay Later (BNPL) services continue to see significant growth across the UK and European markets. Over 19 million UK consumers have used Buy Now, Pay Later (BNPL) services, including 40% of credit cardholders, according to Auriemma Group’s latest issue of Cardbeat UK. Buy Now Pay Later Europe

Much of this growth can be attributed to Klarna and Clearpay, which are the top two providers used and preferred by BNPL users. As of mid-2023, half (51%) of Buy Now, Pay Later users have used Klarna before, while 47% say it is their preferred provider. Use of Clearpay remains notably lower, with one-quarter (24%) of Buy Now, Pay Later users trying the service, and 10% preferring it over other providers. Regardless of the provider, the BNPL experience is overwhelmingly positive for those who have used the service. Over nine-in-ten (91%) BNPL users say they had a positive experience using it (up from 74% in Q4-22).

While expectations of regulation coming to the sector have placed a spotlight on Buy Now, Pay Later practices, discussions have not dampened customer appetite for BNPL. New providers continue to enter the marketplace whilst established players continue to increase their investment and focus on service enhancements. Earlier this month, Klarna confirmed an intention to continue investing in the UK market despite calls for tightened regulation.

Whilst growth continues with the younger generations (54% of credit cardholders under 35 have used at least one BNPL plan), there is increasing evidence that the relevance and appeal of BNPL has broadened. The UK Finance Payment Market Report found that the percentage of pensioners now using BNPL services doubled in 2022 compared to the previous year.

“UK banks and traditional lenders are beginning to recognise that BNPL is here to stay as a way for consumers to pay,” says Simon Cottenham, Head of International Partnerships at Auriemma Group. “The key for these players is to create a product, value proposition and customer journey which can appeal in this competitive marketplace.”

Similar trends are being seen in other European markets with Germany reporting 30% growth in BNPL use in the last year. Around one-quarter of consumers in Europe are believed to have made a purchase using BNPL with annual growth rates forecast in the 20%-40% range by most industry observers.

Auriemma Group will continue to monitor this space closely in upcoming Cardbeat studies and within its Customer Service Roundtable groups.

Survey Methodology Buy Now Pay Later Europe

This Auriemma Research study was conducted online within the UK by an independent field service provider on behalf of Auriemma in July 2023, among 80o+ adult credit cardholders. The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5% unless otherwise noted. The purpose of the research was not disclosed nor did the respondents know the criteria for qualification.

 

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