Ministers are being urged to intervene over a surge in unregulated “buy now, pay later” credit after the amount UK consumers spend online using such deals rose up to £1.7bn a month.
Debt advisers warn that many people are routinely resorting to deferred payments to buy household essentials. Any consumer who then misses payments risks seeing their case turned over to debt collectors.
The volume of the “buy now, pay later” market has more than quadrupled in size since 2020 and is expected to reach a record total of £30bn this year. Campaign groups are demanding urgent action to regulate the sector.
Morgan Wild, interim director of policy at Citizens Advice, said: “Three years on from the government promising to regulate ‘buy now, pay later’ as a ‘matter of urgency’, this much-needed regulation has ended up in the long grass.
“In that time, use has rocketed, and our frontline advisers are now seeing three times as many people who need help to repay their debts as a result. Many of them require emergency support, like food bank vouchers, which is ringing alarm bells that lenders are failing to protect people from the risk of unmanageable debt.”
Figures compiled by Adobe Digital Insights, which tracks hundreds of millions of retail transactions each month, reveal that “buy now, pay later” deals accounted for more than £1 in every £7 spent online in the first three months of 2024.