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Are there too many ‘Buy Now, Pay Later’ schemes at online checkouts?

Do you use Buy Now, Pay Later (BNPL) schemes when shopping online? Have you felt overwhelmed by the options at the checkout? We want to hear from you.

An increasing number of online retailers offer ‘Buy Now, Pay Later’ (BNPL) schemes at the checkout – we want to see firms like this regulated by the Financial Conduct Authority.

BNPL firms, such as Klarna, Laybuy and Clearpay, allow you to order your items and pay for them either in instalments or at a later date.

But we don’t believe it’s always clear at the checkout how the BNPL schemes work or the nuances between different providers. We’re looking into how these schemes are presented at online checkouts and on retailers’ websites, and want to hear about your experiences when using them.

Chaos at the checkout?

An influx of BNPL schemes at the online checkout means deciding how to pay for your order isn’t as straightforward as it used to be.

Some online retailers offer a number of different BNPL schemes that are often promoted from the minute you click onto the homepage and product listing pages all the way through to the checkout. We’re concerned that there’s often sparse detail on how each scheme differs in terms of late fees, credit checks and how repayments actually work in practice.

We want to hear from you if you’ve ever felt confused or overwhelmed at an online checkout that offers multiple BNPL options; did you understand the difference between the schemes? Were you confident you knew exactly what you were signing up to?

Could the retailer have done more to explain the nuances between different providers?

Or if you’ve over used a BNPL scheme and found yourself caught out by late fees or repayment dates that weren’t clearly explained by the retailer, let us know in the comments below.

Have you used multiple BNPL schemes?

We also want to hear from you if you’ve taken out more than one BNPL repayment plan at a time.

Perhaps you’ve shopped with a retailer that offers Klarna and Laybuy, and decided to place two separate orders taking out repayment plans with both providers? Or maybe you’ve used Klarna to pay for orders from a number of different retailers, racking up a handful of repayment plans.

Let us know if you’ve taken out multiple BNPL plans at one time and how you found the experience of managing the repayments.

Whether you’re put off by the influx of BNPL schemes at checkouts or use BNPL wherever you can online, get in touch with your experience in the comments below or email us at yourstory@which.co.uk

Your experiences will help inform our investigation.


I felt this yesterday, ordering something very simple through Very.co.uk became a minefield of the website trying to put a £10 towel on a buy now pay later scheme. It was so pushy I gave up in the end

I’ve had a similar experiences @chiragkhetiya using Wayfair.co.uk. For bigger purchase items like our garden seating, I can understand but for smaller purchases, it seemed madness offering a scheme for a total of £25! I can see why people end up struggling.

I support Which? in wanting to see companies offering BNPL regulated by the FCA.

Like credit cards, BNPL can help push people into debt and perhaps it is inappropriate for BNPL to be offered for luxury goods.

What is particularly poor is when I have already decided to make a purchase, I head for the checkout and I am then presented with the distraction of using a BNPL option to pay for goods. This can also happen with options to pay using PayPal and then setting up a separate credit agreement.

Almost without exception, I avoid these options, as I get cashback on my credit cards, or have a better, long-term 0% interest rate deal running. Paying for an item costing more that £100 loses the consumer the valuable protections of using a credit card, so I would never use BNPL in those circumstances.

I also prefer all my purchases to be shown on one statement and automatically covered a pay-in-full direct debit mandate.

BNPL needs to be banned as a checkout option. If entering into a purchase with the intention of using BNPL (presumably in the knowledge that you cannot afford to play in full), it must be only be offered to registered customers that have pre-selected the option and confirmed they have read all the terms and conditions, before reaching the checkout.

The notion of preventing someone buying “luxury goods” on BNPL seems a little odd. Surely it is anyone’s freedom to buy what they like (and take the consequences) and there are many ways they can pay, including a credit card. It would not be known whether someone is making a one off exceptional purchase, what their reason is, who the “goods” are for. And, in any case, exactly what is a “luxury”? To many, it may be anything other than life’s essentials.

However, I have an inherent aversion to providing easy loans that can help people into debt that they have not the ability to handle. Pay day loans were an extreme example. The problem with BNPL, apart from being unregulated, seems to be their use for low value purchases, encouraging a lot of such purchases when they are unnecessary and, for some, unaffordable. The same argument applies to credit cards, of course.

Protecting people from themselves is a perennial problem. Should we even attempt it, and by what authority, when we live in a free society? Education is one way, experience is another where people who get into difficulties must learn the consequences and find their own way out.

But ban them purchasing particular goods in any way open to them? Not for us to decide, I would suggest.

I did not suggest that anyone should be prevented from buying luxury goods, Malcolm, simply that BNPL should not be offered on these goods. I understand that BNPL is extensively used to purchase fashion clothing and accessories.

I do not understand why BNPL is not currently regulated by the FCA.

It seems that clothing retailers and on-line purchasing are the main promoters of BNPL, possibly because they are the chief outlets for impulse buying where it is easy to add a few extras to the shopping basket without noticing the escalating cost.

I can’t see the point of any limitations on ‘luxury’ goods; discriminating between them and other purchases would be a problem and since many of them are likely to be gifts it seems unnecessary to complicate things like that.

There needs to be help for people who get into financial difficulties from overuse of extended payment facilities but not at the expense of others who manage their money responsibly. People who apply for a credit card are assessed to establish a suitable credit limit and their accounts are to some extent supervised. I don’t know whether any similar process applies to using BNPL.

“Protecting people from themselves is a perennial problem. Should we even attempt it, and by what authority, when we live in a free society?” That’s an interesting question and where do you draw the line?

The FCA is there to protect us from unscrupulous financial services and ill-advised investments. By what authority?

Laws about food, medicine and product safety are designed to protect us from unscrupulous manufacturers out to make a quick buck by adulterating food, selling quack cures and making cheap products. By what authority?

The laws on fraud are supposed to protect us from con artists out to steal our money. By what authority?

Shouldn’t people in a free society be allowed to make a living in any way they see fit? And shouldn’t that include FCA, FSA, MHRA, Trading Standards, solicitors and police?

To answer wavechange’s question: “I do not understand why BNPL is not currently regulated by the FCA.”

There is an anomaly in The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, that was designed so that some types of commercial credit facility – e.g. 30 / 60 days settlement of invoices or monthly accounts – were not caught up the legislation to control consumer credit.

Provided the loan is for less that 12 months and no fees are charged, it is currently exempt. Until the law is tightened, the FCA have no authority to act on consumer credit arrangements that exploit this loophole. It is already recognised and in hand.

My comment was made in the context of making financial – in this case purchasing – decisions – in perfectly legal circumstances.

Legislation is used to help prevent us being exposed to danger, fraud, for example. However, it does not prevent us, say, importing a dangerous product, buying illicit or harmful substances on the internet, investing money with an unregulated outfit. It seems to me that only knowledge, information, common sense, experience can help is avoid that potential harmful activity.

Making ill-advised purchases that get us into unmanageable debt is surely something we have to try to learn to avoid. Is there any “authority” that can stop this? Some agency that watches over each of us and governs our spending?

What would you classify as “luxury goods”?

”Which? is calling for greater regulation to ensure BNPL firms are being transparent about the risks of using their services.

They also report ”In February this year, the government announced BNPL firms would be regulated.

Read more: https://www.which.co.uk/news/2021/06/buy-now-pay-later-not-just-used-by-fashion-conscious-young-shoppers/ – Which?

It would be useful if Which? had also explained why this method of payment is currently not regulated, just as Em has done.

Thanks for explaining why BNPL is not currently regulated, Em.

I didn’t have time earlier (and don’t really now, so E.&O.E.), but I think this is the relevant section, which I’ve redacted for clarity:

60F.—(1) A credit agreement is an exempt agreement for the purposes of this Chapter in the following cases.

(2) A credit agreement is an exempt agreement if—

(a) the agreement is a borrower-lender-supplier agreement for fixed-sum credit,

(b) the number of payments to be made by the borrower is not more than twelve,

(c) those payments are required to be made within a period of 12 months or less (beginning on the date of the agreement),

(d) the credit is—

(ii) provided without interest or other charges.

I usually use a credit card for on-line purchases and haven’t noticed or paid much attention to the occasional options to use Klarna [the only BNPL platform I have seen]. BNPL has no attraction to me over a credit card.

I certainly share the concerns about the convenience of BNPL facilities encouraging people to commit themselves to more than they can pay back and therefore get into debt. I therefore agree with Wavechange and support the call for regulation, including a monitoring process for people who might be over-extending themselves through a number of plans with one facilitator but, more importantly, those who spread themselves across a number of facilitators and lose control.

To some extent these risks have been with us since the days of hire purchase and catalogue shopping but the tendencies to run on credit are greater these days due to peer pressure expressed through social media. I have direct experience of a member of my family who allowed themselves to get into a financial pickle through prolific use of BNPL facilities. It was a distressing situation for the individual and their immediate family but, with a good bit of rallying round and pulling together it has been resolved, however it sure has left its mark.

For a more in depth understanding of the rise and rise of BNPL and some of the psychology used to promote this, you may find the following of interest:

psychologytoday.com – Beware of the “By Now, Pay Later” Psychological Pitfall.

Thank you, Beryl.

It’s interesting that BNPL appeals to — and to some extent is marketed towards — two particular groups who should not get themselves into financial difficulties and ought to be protected against that possibility : (a) People with no credit such as teens and young adults, and (b) People with poor credit

I liked this piece of advice at the end of the article — “Remember, your worth does not come from what you wear or the items you own. You are innately worthy and deserving of all that is good. You are worth saying no to BNPL offers that may negatively impact your emotional and financial wellbeing.

I am glad you picked up on the addendum John, which is probably the most revealing and important part of the article.

The fierce competition in the online marketplace is now heavily targeted at both groups, all of whom will be in possession of mobile phones, provided by parents in the interests of their young offsprings safety.

I was looking at a potential scam email offering Klarna payments, that eventually linked me onto the genuine Klarna website. I was surprised by what I found, which I think needs to be reported to the ASA and/or FCA when I find the time. Maybe Which? could oblige?

The webpage is headlined:

Klarna is the smooothest and safest way to get what you love today, and pay over time. No interest. No hidden fees. Just Klarna.

Further down the page, three different payment options are offered, each illustrated by a mobile phone app screen shot and a caption as follows:

Pay in 3
Spread the cost of your purchase into 3 interest-free instalments. The first payment is made at point of purchase, with remaining instalments scheduled automatically every 30 days.

Pay in 30 days
Make your purchase today so you can try before you buy. Only pay for what you keep. Pay up to 30 days later. No interest. No fees. No impact credit score.

This longer term credit option allows you to spread the cost of more expensive purchases over 6-36 months.

The last option – Financing – was illustrated with an app clearly showing 6 monthly payments with an interest rate of 0% APR. How does that work? Is that even better than the Pay in 3 option?

The link to the “Legal terms” shows that this is an FCA regulated product. It goes on to state:

3. Interest
For any Purchase made with the Account, “the Transaction Date” is the day when the goods are dispatched or, for a service, when the service is made available to you. Interest is charged, starting on the Transaction Date, on the balance outstanding on your Account for Purchases, with each Purchase being added to the balance on its Transaction Date. Interest is calculated on a daily basis and added to your Account each month on the date we produce your statement.

The standard interest rate is 0.047 % per day, which results in an effective annual rate of 18.9 %. (“Standard Rate”). It is charged daily on the balance outstanding of all Purchases other than Special Purchases. The Standard Rate is also charged on fees (if any) on which interest has become payable.

Misleading or what? How does that go with the headline: No interest. No hidden fees. plus the screenshot illustration showing 0% APR?

Visit www[dot]klarna[dot]com/uk/smoooth/