BNPL volumes to see 52% increase in 2022

These industry estimates coincide with a recent spike in demand for other forms of consumer credit, with net credit card borrowing increasing 11.6% in the 12 months to April 2022 according to the Bank of England. 

Overall, consumer credit such as personal loans and products like car finance has seen a 12-month growth rate of 5.7%. However these figures, according to Freedom Finance, don’t account for BNPL lending which has caused concern among industry participants and the regulator. 

And, while BNPL is already a large part of new lending in the UK, it remains a small proportion of the total outstanding consumer credit in the UK, which currently stands at more than £200bn. 

Commenting on the research, Freedom Finance’s chief revenue officer Michael Davidson, said: “There is a clear behavioural shift being driven by the growth in online shopping and increasing trust in digital lending. That is why the industry and regulator are reacting to the rise in this type of lending, as consumer demand accelerates innovation in the embedded finance sector.  

“While BNPL is clearly the most well known product, embedded finance has many more credit opportunities - that retail and other sectors are beginning to take advantage of - as credit and financial services are integrated into a broad range of online user experiences.

“Many retailers and businesses in other sectors are rapidly expanding the range of embedded credit options they can provide to help their customers with genuine lifestyle finance needs. 

“There is a danger that the focus of BNPL as part of the recent embedded finance movement combined with a cost-of-living squeeze could leave other viable credit options in the shadows. 

"Product choice in this space is essential to ensure customers get the right credit for their needs rather than the quickest, easiest option that may not necessarily be the best.”