Use of buy now pay later (BNPL) services soared among British consumers over Black Friday and Cyber Weekend, fresh data shows.
Shoppers spent £475million through BNPL services between 24 November and 27 November, marking a 15.8 per cent rise on last year and accounting for 13.8 per cent of total online spend, according to Adobe Analytics.
The sharp rise demonstrates the growing popularity of BNPL at a time of heightened consumer pressure, with overall online spending over the weekend nudging just 5.5 per cent higher on last year to £3.45billion.
Shoppers spent £475million through BNPL services between 24 November and 27 November, according to data from Adobe Analytics
A recent study from the Financial Conduct Authority found that around 14million people in the UK – 27 per cent of adults – used BNPL in the six months to January 2023, up from 17 per cent in the 12 months to May 2022.
Companies such as BNPL giant Klara have benefitted from the increase in use.
Earlier this month, the Swedish firm reported a profit of £9.6million for the third quarter of 2023 having made a loss of £156million a year earlier.
Revenue jumped 30 per cent to £445million as the 150 million shoppers that use its services around the world increasingly looked to spread paying for their online purchases as the rising cost of living squeezes incomes.
BNPL allows shoppers to defer payments for a month or split the total into smaller interest-free instalments. But the sector is unregulated and has faced criticism for slack affordability checks and allowing vulnerable customers to get into debt.
Charities and MPs have urged the government to speed up the introduction of new, tougher rules to protect consumers.
The FCA figures also reveal more than a quarter of regular BNPL users have missed a bill or debt repayment in three of the last six months, totalling 529,200 people.
Disappointment for retailers
Adobe Analytics said UK shoppers spent £1.04billion on Black Friday and an additional £2.41 billion over the following three days, a period known as Cyber weekend.
Total spending since 1 November reached £12billion, up 5.1 per cent on 2022 levels.
However, data from Barclays showed that Black Friday transactions are down 0.63 per cent year-on-year.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: ‘Despite retailers’ best efforts jamming inboxes full of promotions and offering in-store deals, Black Friday is likely to have left them feeling a little blue.
‘Transaction volumes have fallen back by 0.6 per cent compared to last year, according to Barclaycard, and given how deep many discounts are likely to have been, margins are likely to have taken a hit.
‘Retailers offering discounts need to shift more to stay paddling ahead but, as cost-of-living pressures continue to weigh on household budgets, shoppers are inevitably being more cautious.
‘There may be pockets of strength in the weeks ahead, particularly in city centre areas where consumer can combine shopping and socialising, but while consumer confidence has improved a little, it’s clear that many people are still wary of spending big amid an uncertain economic outlook.’
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