Money talks

Buy now pay later (BNPL)  

The rise of contactless payments speeds up digital transactions and also means consumers do not need to hang around at the checkout in-store. 

However, convenience and flexibility are also key to the payment revolution. This is evidenced by BNPL’s rise in the rankings of transactional methods. 

The research found that BNPL’s usage accelerated last year and this is not surprising given its many benefits. For retailers, BNPL has been shown to increase conversion, support new customer acquisition and drive order value.

While for consumers, BNPL enables customers to make purchases and pay for them over time. Best of all, consumers don’t pay interest. When a customer pays for a product using BNPL, the provider pays the retailer in question the full cost of the item at the point of sale on their behalf. The customer then pays the BNPL provider back in regular, equal instalments.

In total, 22% of UK consumers made a BNPL purchase in the six months up to July 22, 2022. And in the month up to that point, consumers who had used BNPL made an average of three purchases via that method – with £61 the average spend per BNPL transaction.  

Consumers were found to be more likely to use BNPL on clothing (54%), followed by electronics and computing (32%) and health and beauty (29%).  

However, the research suggests there is untapped potential for more retail sectors to take advantage of people’s growing ease with this method of payment. For example, 46% of BNPL users said they would make luxury retail purchases if BNPL were available in this category.

Cryptocurrency 

Cryptocurrency is a digital, decentralised means of financial exchange that originally emerged with the intention to overcome the limitations of existing currencies and financial transactions. However, with consumer interest in crypto growing, it is now making major global economies reassess their entire financial systems. 

In 2022, UK Finance consumer research found that 11% of UK adults owned cryptocurrency – while the 2022 HMRC consumer survey indicated this figure sat at around 10%. This represents an increase from 5.7% in 2021, according to data from the Financial Conduct Authority. Moreover, HMRC expects this number to grow again in 2023.

The research shows 21% of UK consumers surveyed have owned cryptocurrency at some point, such as Bitcoin and Ethereum, while 13% want to learn more about it. This suggests potential for crypto as part of the future of the payments landscape. 

Crypto’s long-term ambition for recognition and wider circulation would require more education and awareness, though, with 25% of consumers concerned about the security of trading cryptocurrency. 

There are, of course, wider challenges with the adoption of cryptocurrencies. Most are highly volatile with values swinging widely due to speculation. There have also been critiques about the lack of trust and the ability to use pseudonyms to make payments making it open to fraud, alongside its potentially negative impact on the environment as the technology behind cryptocurrencies requires major energy consumption.