Home Consumer debt Use of BNPL to pay UK energy bills raises concerns

Use of BNPL to pay UK energy bills raises concerns

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UK households facing high energy costs have been driven to buy now, pay later (BNPL) in what energy and debt advice groups have called a “really worrying” development. reported the Financial Times on Sunday May 8.

Financing programs could help people spread payments on electricity bills. However, advice groups said it could also mean families getting involved in “desperate” measures to pay for basic things.

Energy Support and Advice UK, which runs a Facebook advice service to help customers with their bills, said on its site that offers from BNPL should be treated with “extreme caution”. Gemma Hatvani, the founder and CEO, said some households were bypassing their suppliers and going straight to BNPL business, which “just delayed the inevitable”.

A BNPL company, Zilch, offers households to pay their energy bills in four instalments. Payments can be made over six weeks and the company said there was no interest. Zilch said he has “never charged a client a late fee” and has not had to use a debt collection agency, adding that anyone who is late with a refund can no longer to borrow.

However, debt and energy advisory groups have said consumers should instead contact their energy providers to negotiate repayments. Matthew Upton, policy director of the charity group Citizens Advice, said BNPL “can be like quicksand – easy to slip in and very hard to get out of”.

PYMNTS wrote that Millennials and Gen Z customers are more likely to use digital technologies to make payments. Young consumers were the first to adapt to BNPL, with many coming from India and the United States in the lead.

See also: Young consumers embrace mobile wallets, BNPL

Almost three-quarters of millennials and 73% of Gen Z customers in India said they had paid for something with BNPL. American millennials followed suit, with 61% using BNPL tools to make payments.

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NEW PYMNTS DATA: THE TRUTH ABOUT BNPL AND STORED CARDS – APRIL 2022

On: Shoppers who have store cards use them for 87% of all eligible purchases – but that doesn’t mean retailers should start buy now, pay later (BNPL) options at checkout. The Truth About BNPL and Store Cards, a collaboration between PYMNTS and PayPal, surveys 2,161 consumers to find out why providing both BNPL and Store Cards is key to helping merchants maximize conversion.