Buy now, pray later? How deferred payments could harm the customer experience (Sep '21)

Alternative payment methods like buy-now-pay later offer a compelling proposition for retailers. But are commercial gains today masking problems tomorrow?

Originally published in a special report in The Times on 17 September 2021.
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The world of retail has been transformed since the melodies of modems became an everyday norm in the late 1990s. More recently, however, it’s not just how we shop that’s changing – it’s how we pay. 

The historical dominance of debit and credit card payments is being challenged by so-called “alternative payment methods”. One of these in particular – buy-now-pay-later (BNPL) – is gaining significant traction.

BNPL schemes have risen in prominence for various reasons. On the one hand, they have spawned new entrants to the financial services sector with dizzying valuations. 

On the other, they’ve attracted the attention, if not yet the ire, of regulators. In early 2021, the UK Government announced its intention to bring BNPL firms under the regulatory oversight of the Financial Conduct Authority, with similar measures in progress or under consideration around the world.

Primarily, however, their prominence is due to their rapid adoption by consumers and retailers alike, with BNPL spending in the UK set to reach £26.4 billion over the next three years. This “alternative” payment method has undoubtedly entered the mainstream.

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