
The Rising Challenges and Opportunities in the UK Buy-Now, Pay-Later Sector
The buy-now, pay-later (BNPL) sector is witnessing an unprecedented surge in the UK, with consumers increasingly relying on these solutions for a range of purchases, from Apple iPhones to Uber Eats takeaways. According to Bloomberg, the market grew nearly a fifth to $27 billion last year, now representing 7.7% of the UK's total e-commerce market. This growth is propelled by companies such as Klarna Bank AB, PayPal Holdings Inc., and Afterpay Ltd, with new entrants like US startup Affirm Holdings Inc. joining the landscape.
As the sector expands, so does the competition, compelling retailers such as Sports Direct Ltd and the Very e-commerce marketplace to introduce their BNPL offerings. Banks like HSBC Holdings Plc have also entered the fray, attracted by the model's simplicity, which often involves just a tap on a mobile device. Analysts highlight the UK's BNPL market as one of the most mature and competitive worldwide, having overtaken Sweden in terms of transaction volumes.
Challenges of Regulation and Thin Margins
The sector's rapid growth hasn't come without challenges. The UK government is preparing to impose regulations that mirror traditional credit checks, aiming to prevent unmanageable debt for consumers. This regulatory environment arises as UK consumer credit reached PS232.6 billion in November. The Financial Conduct Authority will require BNPL firms to implement affordability checks, potentially increasing operational costs for these companies.
This landscape is already affecting companies operating on thin margins. Many BNPL firms, including Klarna, Sezzle Inc., Zilch Technology Ltd, DivideBuy, and PayL8r, derive their revenue from merchant fees, usually around 3% of the transaction value. With rising interest rates, these firms have adopted a securitization model, selling packaged short-term loans to credit investors.
A Market Facing Consolidation Risks
Industry experts, like Jonathan Chertkow from Hogan Lovells, foresee potential consolidation within the sector. As regulation increases, smaller firms may find the compliance burden too costly, while larger players gear up for these changes to gain market advantage. The requirement for BNPL firms to hold capital against redress measures and possible losses could drive this consolidation.
Affirm remains optimistic despite these challenges, pledging to fill market gaps by offering broader payment options and skipping late fee charges. The company aligns with regulatory movements aiming for consumer transparency and choice. However, the effectiveness of these efforts is yet to be seen, especially as some firms like NatWest Group Plc and Laybuy have already retreated from the market.
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1. INTRODUCTION
Making Data-Driven Decisions to Grow Your Business
- REPORT DESCRIPTION
- RESEARCH METHODOLOGY AND AI PLATFORM
- DATA-DRIVEN DECISIONS FOR YOUR BUSINESS
- GLOSSARY AND SPECIFIC TERMS
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2. EXECUTIVE SUMMARY
A Quick Overview of Market Performance
- KEY FINDINGS
- MARKET TRENDS This Chapter is Available Only for the Professional Edition PRO
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3. MARKET OVERVIEW
Understanding the Current State of The Market and Its Prospects
- MARKET SIZE
- CONSUMPTION BY COUNTRY
- MARKET FORECAST TO 2030
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4. MOST PROMISING PRODUCT
Finding New Products to Diversify Your Business
This Chapter is Available Only for the Professional Edition PRO- TOP PRODUCTS TO DIVERSIFY YOUR BUSINESS
- BEST-SELLING PRODUCTS
- MOST CONSUMED PRODUCT
- MOST TRADED PRODUCT
- MOST PROFITABLE PRODUCT FOR EXPORT
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5. MOST PROMISING SUPPLYING COUNTRIES
Choosing the Best Countries to Establish Your Sustainable Supply Chain
This Chapter is Available Only for the Professional Edition PRO- TOP COUNTRIES TO SOURCE YOUR PRODUCT
- TOP PRODUCING COUNTRIES
- TOP EXPORTING COUNTRIES
- LOW-COST EXPORTING COUNTRIES
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6. MOST PROMISING OVERSEAS MARKETS
Choosing the Best Countries to Boost Your Exports
This Chapter is Available Only for the Professional Edition PRO- TOP OVERSEAS MARKETS FOR EXPORTING YOUR PRODUCT
- TOP CONSUMING MARKETS
- UNSATURATED MARKETS
- TOP IMPORTING MARKETS
- MOST PROFITABLE MARKETS
7. GLOBAL PRODUCTION
The Latest Trends and Insights into The Industry
- PRODUCTION VOLUME AND VALUE
- PRODUCTION BY COUNTRY
8. GLOBAL IMPORTS
The Largest Importers on The Market and How They Succeed
- IMPORTS FROM 2012–2024
- IMPORTS BY COUNTRY
- IMPORT PRICES BY COUNTRY
9. GLOBAL EXPORTS
The Largest Exporters on The Market and How They Succeed
- EXPORTS FROM 2012–2024
- EXPORTS BY COUNTRY
- EXPORT PRICES BY COUNTRY
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10. PROFILES OF MAJOR PRODUCERS
The Largest Producers on The Market and Their Profiles
This Chapter is Available Only for the Professional Edition PRO -
11. COUNTRY PROFILES
The Largest Markets And Their Profiles
This Chapter is Available Only for the Professional Edition PRO- United States
- China
- Japan
- Germany
- United Kingdom
- France
- Brazil
- Italy
- Russian Federation
- India
- Canada
- Australia
- Republic of Korea
- Spain
- Mexico
- Indonesia
- Netherlands
- Turkey
- Saudi Arabia
- Switzerland
- Sweden
- Nigeria
- Poland
- Belgium
- Argentina
- Norway
- Austria
- Thailand
- United Arab Emirates
- Colombia
- Denmark
- South Africa
- Malaysia
- Israel
- Singapore
- Egypt
- Philippines
- Finland
- Chile
- Ireland
- Pakistan
- Greece
- Portugal
- Kazakhstan
- Algeria
- Czech Republic
- Qatar
- Peru
- Romania
- Vietnam
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LIST OF TABLES
- Key Findings In 2024
- Market Volume, In Physical Terms, 2012–2024
- Market Value, 2012–2024
- Per Capita Consumption, By Country, 2018–2024
- Production, In Physical Terms, By Country, 2012–2024
- Imports, In Physical Terms, By Country, 2012–2024
- Imports, In Value Terms, By Country, 2012–2024
- Import Prices, By Country Of Destination, 2012–2024
- Exports, In Physical Terms, By Country, 2012–2024
- Exports, In Value Terms, By Country, 2012–2024
- Export Prices, By Country Of Origin, 2012–2024
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LIST OF FIGURES
- Market Volume, In Physical Terms, 2012–2024
- Market Value, 2012–2024
- Consumption, By Country, 2024
- Market Volume Forecast to 2030
- Market Value Forecast to 2030
- Products: Market Size And Growth, By Type
- Products: Average Per Capita Consumption, By Type
- Products: Exports And Growth, By Type
- Products: Export Prices And Growth, By Type
- Production Volume And Growth
- Exports And Growth
- Export Prices And Growth
- Market Size And Growth
- Per Capita Consumption
- Imports And Growth
- Import Prices
- Production, In Physical Terms, 2012–2024
- Production, In Value Terms, 2012–2024
- Production, By Country, 2024
- Production, In Physical Terms, By Country, 2012–2024
- Imports, In Physical Terms, 2012–2024
- Imports, In Value Terms, 2012–2024
- Imports, In Physical Terms, By Country, 2024
- Imports, In Physical Terms, By Country, 2012–2024
- Imports, In Value Terms, By Country, 2012–2024
- Import Prices, By Country, 2012–2024
- Exports, In Physical Terms, 2012–2024
- Exports, In Value Terms, 2012–2024
- Exports, In Physical Terms, By Country, 2024
- Exports, In Physical Terms, By Country, 2012–2024
- Exports, In Value Terms, By Country, 2012–2024
- Export Prices, 2012–2024