More than a fifth (22%) of adults would have turned to credit cards to make a purchase if they hadn’t had access to innovative payment methods like Buy Now, Pay Later (BNPL). The findings come as average credit card APRs hit a 20-year record high in February, at 35.8%.

The new data issued by Clearpay, and undertaken by Public First, has been released ahead of the FCA’s new BNPL regulations coming into force in July, which will strengthen consumer protection, and empower consumers to confidently use BNPL to manage their money.

The findings demonstrate that BNPL is already helping consumers to be more financially resilient and is providing them with greater flexibility when making purchases. When asked what they would have used to make a purchase if they hadn’t used BNPL, 12% said they would have taken money from their personal savings, potentially reducing their ability to manage larger financial shortfalls in the future.

The research also found that 15% would have had to wait until they had saved up to make a purchase if they had not used BNPL, whilst 13% would not have made the purchase at all, at the risk of going without essential items.

A further 9% would have had to borrow from family or a friend - which could have both a financial and emotional impact; or use a different financial product such as a bank loan at the risk of having to borrow more than necessary and at a higher cost.

BNPL has become a critical payment option helping consumers to manage their spending responsibly. Globally, 96% of Clearpay instalments are paid on time, and 98% do not incur a late fee.

Clearpay’s findings follow a wider report from Fair4all Finance, the financial inclusion organisation, which states that if used correctly, BNPL “has significant potential to support financial inclusion by providing consumers with access to small amounts of interest free credit when they need it”. The report found that up to 30% of current BNPL users may be rejected when the new regulations are fully implemented, potentially reducing access to a flexible financial product for millions of people. This is why Clearpay has always called for proportionate regulation that is fit-for-purpose and that delivers best customer outcomes.

Rich Bayer, Chief Executive Officer of Clearpay, at Block, said: “Tools like Buy Now, Pay Later, which put the customer first, are essential in helping shoppers manage their spending without having to turn to high-interest credit that comes with the risk of revolving debt.

“BNPL is an everyday solution for millions of people, with almost one in five already using it at least once a month. Shoppers now expect to see BNPL at the checkout when making a purchase and our research indicates that some would go to another retailer if their preferred payment method or BNPL product of choice was not available. 

“With regulation coming into force in July, this will strengthen consumer protection and give consumers greater confidence when using BNPL.”

Clearpay already supports consumers to manage their money effectively by only increasing spending limits when users have demonstrated reliable repayment behaviour, capping late fees, pausing accounts if a single payment is missed, and working with consumers to resolve any repayment issues.

Alongside new affordability checks, the FCA’s new regulations will increase information about BNPL products and give consumers the right to complain to the financial ombudsman, meaning that they will be able to benefit from industry-wide safeguards.