Amazon has announced a collaboration with Barclays to open up the booming UK market for âbuy now, pay laterâ.
The e-commerce giant is partnering with the bank to launch a new product called rates.
This allows customers to spread the cost of purchases over Â£ 100 in multiple installments between three and 48 months.
Amazon and Barclays first introduced this in Germany last year.
Rob Levy of Amazon UK says, âWe strive every day to innovate on behalf of our UK customers. Installment payments are a way of offering customers flexible options that allow them to either pay now or break the cost of major purchases into budget-friendly monthly installments. “
“This is a simple and transparent service from Barclays that automates monthly payments and is more convenient for customers who make larger purchases.”
“More needs to be done to educate consumers about unregulated BNPL products”
Unregulated Buy Now Pay Later (BNPL) products can have unintended consequences that consumers are often unaware of, according to a recent study by Barclays.
2,000 Brits who had previously used BNPL services were surveyed. 39% did not have a thorough understanding of how the products worked.
And with 35% saying they are more likely to use BNPL as the cost of living rises, a growing debt bubble could be on the horizon unless steps are taken to fully regulate point of sale lending, Barclays warns.
36% admitted using BNPL to buy more than they can afford and 25% said they had difficulty keeping track of their expenses because they borrowed from multiple providers. One in four states that they missed a repayment as a result.
According to Barclays, one of the pitfalls with unregulated products is that a customer’s personal financial situation is not always thoroughly checked and customers may not have sufficient funds to repay loans on time.
The research shows that many BNPL buyers (36 percent) do not fully understand the consequences of default.
One in five does not know that some BNPL providers charge late payment fees for missed payments or that it can have a negative impact on their creditworthiness (20%).
58%, on the other hand, are unaware that they are generally not as well protected when taking out unregulated loans as those taken out using regulated payment methods.
If customers have reason to complain about a regulated payment method and are dissatisfied with the decision of their financial service provider, they can also forward this to the Financial Ombudsman Service (FOS). However, this option is not available for an unregulated product.
Antony Stephen, CEO of Barclays Partner Finance, said: “More needs to be done to educate consumers about unregulated BNPL products.”
“Too many people take out these loans without realizing the impact they could have on their finances, and with the festive shopping in full swing, it is important that buyers do not run the risk of signing agreements, which you may find it difficult to repay in the future. “.”
âTo protect consumers from taking on more debt than they can comfortably afford, and to ensure that minimum standards are in place across the industry, we believe regulation should ensure that all BNPL providers are required to conduct adequate affordability assessments that match them for others, regulated consumer credit products correspond. “