Laybuy, the specialist Buy Now Pay Later (BNPL) provider, has published new research to gain a deeper understanding of consumer views on credit products – with the majority of users recognising BNPL as a credit product over other more traditional forms of credit such as overdrafts or even mortgages.
The research comes as the industry prepares for the results of the Government’s recent consultation on future regulation of the sector, with heightened regulatory scrutiny potentially looming.
In conducting the research, more than 2,000 people from across the UK were asked about their past, present, and likely future usage of BNPL, knowledge of wider credit products and opinions on credit checks.
Gary Rohloff, Managing Director and Co-Founder, Laybuy, explained: “BNPL is growing in popularity and for many customers, it is a far better way of budgeting than credit cards. However, responsibility is crucial. Just because there is no interest in BNPL, we should never forget that this is a credit product and consumers have the right to be protected.
“It is pleasing to see that many of the measures we have taken, including hard credit checks, are widely supported by the public at large. The Government’s consultation has now been published – it’s important we use this opportunity to raise standards across the board.”
Laybuy is currently the only BNPL provider to conduct hard credit checks. When asked whether BNPL providers should carry out credit checks, 81% agreed that credit checks on financial history should be carried out before a customer can access the product.
Presented with the choice between a hard or soft credit check, there was strong support for both, but slightly greater support for soft credit checks (75%) compared to hard credit checks (63%).
Additionally, when asked whether BNPL should report usage of their products to other credit companies, a large majority (71%) agreed that sharing the information is necessary.
Finally, when asked when they thought it was best to carry out hard credit checks. The most popular answer was that it should take place when opening an account (48%). Ultimately, out of 81% who supported the use of credit checks, 46% believed soft credit checks were the best approach when applying for BNPL products.