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Treasury

Does BNPL growth mean regulation is urgently needed?

The established banks have mixed feelings about the growth of buy-now-pay-later as they ponder new payment options that are undercutting lucrative credit-card transactions.

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Photo: iStock

A survey of UK consumers published by card-issuing platform Marqeta in September revealed that seven-out-of-10 respondents preferred buy-now-pay-later (BNPL) options to credit cards.

They cite affordability and ease of management as the key factors, and more than half (54%) said BNPL would replace their use of credit cards – despite more than one third only trying it for the first time since the start of the pandemic.

According to data from Capital Economics, more than 10 million people used BNPL in the UK last year and it accounted for 3.6% of total online retail sales.

This growth has attracted the attention of the big banks. Goldman Sachs has agreed a deal to buy home-improvement consumer loan origination platform GreenSky, and earlier this year Barclays announced a partnership with fintech Amount to develop point-of-sale financing products.

In July, BNP Paribas confirmed its acquisition of mobile payment solutions provider FLOA, which offers a split-payment solution. The acquisition will accelerate the development of its BNPL offer, according to Neil Pein, global head of Axepta BNP Paribas Group and head of payments transformation. “We will support FLOA in its European expansion,” he says.


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