Clearpay, a leader in the Buy Now, Pay Later (BNPL) sector, has published new research that reveals a growing trend in BNPL usage across all age groups in the United Kingdom.
The study shows that 30% of British adults have used the BNPL service for at least one payment over the 12 months ending in August 2023. Notably, the service has found significant traction among Millennials and Gen X, with 41% and 36% usage rates respectively.
Produced in collaboration with Oxford Economics, the ‘Economic Impact of Clearpay in the UK’ report delves into the psychological benefits of using BNPL services. Nearly four in five respondents, or 78%, said that using BNPL services helped them reduce stress associated with the cost of large purchases. Additionally, two-thirds, or 65%, stated that BNPL helped alleviate the financial stress commonly associated with festive spending.
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The report also compared the stress levels associated with BNPL and credit card usage. Of the BNPL customers surveyed, 45% perceived this payment method to be less stressful than borrowing on a credit card. This is in stark contrast to just 10% who found credit cards to be the less stressful option between the two. Furthermore, 78% of respondents found BNPL to be a cheaper alternative to other credit payment options. When the focus was narrowed down to just Clearpay customers, these numbers increased to 83% finding it cheaper and 81% indicating that it helped them avoid high-interest credit card debt.
Rich Bayer, Clearpay’s UK Country Manager, emphasized the importance of these findings, stating, “Fresh data like this is incredibly valuable for the future of the UK credit market, as it tracks the impact of the latest payment innovations. Thanks to BNPL, splitting a purchase over multiple payments no longer has to come with the stress of high-interest rates or the risk of revolving debt. It’s no surprise that it has now become a preferred everyday payment option trusted by consumers from all generations.”
In the broader financial landscape, data from the Bank of England indicates that while BNPL usage has been on a steady rise since 2020, traditional forms of credit like credit cards and overdrafts have seen a slight decline over the same period. This suggests a shift in consumer preference towards more flexible and less stressful payment options.
Beyond consumer preferences, the report also examined the economic impact of Clearpay in the UK market. Since August 2022, the company has contributed nearly £1 billion (£940 million) in additional sales to its UK merchants. These merchants have also collectively saved £100 million through various gains such as lower fraud rates, improved order processing, better inventory management, lower marketing costs, lower default rates, and fewer returns.
The study also revealed that the incremental sales generated by Clearpay have had a ripple effect on the job market. Researchers calculated that these sales have supported 11,000 jobs across the UK, benefiting not just Clearpay’s merchant partners but also their supply chains and the broader economy through increased employee-wage spending.
