MPs to increase pressure on Government over BNPL regulation

Buy-Now-Pay-Later (BNPL) services allow consumers to pay for purchased goods in instalments over a set period of time. They can be used on virtually every type of product, but are primarily used in online clothes shopping by younger consumers.

It saw an explosion of popularity during the pandemic as lockdown caused online shopping to surge, leading to huge growth of BNPL firms including Klarna, Stripe and Zilch. 

Many traditional banks and services have launched variations of BNPL functionality, such as PayPal.

Charities such as StepChange have warned about BNPL being presented to consumers as a convenient option at checkout, as reliance on the services can lead to debt.

On Wednesday, the government will vote on an amendment to the Financial Services and Markets Bill which would require regulations on BNPL to be published within 28 days of it becoming law.

The Labour front bench is expected to back the amendment, tabled by Labour MP Stella Creasy. Several Tory MPs are also expected to support the amendment, as some ministers are said to have privately admitted that the issue must be tackled now.  

Speaking to the Daily Mail, Creasy stated that BNPL was “mimicking” the payday loan industry, encouraging consumers to “develop a habit” of using its services in order to make people reliant on credit as well as ’exploiting’ those facing financial difficulties.