Money 20/20 EU: what’s next for BNPL?


The final day of Money 20/20 Europe opened with a hot topic with the session entitled ‘What’s next for Buy now pay later (BNPL)?’. As the UK and other governments have started to regulate this form of credit, this panel discussed what needs to be done to make this instrument sustainable and beneficial to consumers.

The panel included Ruth Spratt, UK Country Manager at Zip, Clare Gambardella, Chief Customer Officer at Zopa, and Alice Tapper, finance expert and author of Go Fund Yourself.

“It’s a very exciting space. It’s a growth space,” commented Spratt. “It’s a product that customers will continue to love and continue to use by the millions around the world. So you know it’s going nowhere.”

Gambardella discussed BNPL’s current position: “We are seeing a situation where the proportion of customer outcomes is not as positive as we would like. And I think that’s really because of affordability issues, because of the transparency of the agreement that the customer is entering into, and also because of the tools and the training that customers need to manage debt at the point where they incur it, what can be a fairly fragmented environment.”

When asked if BNPL is perceived as a “healthy” form of credit, Tapper said: “When it comes to good and bad credit, I don’t think it’s the product that matters specifically. The usefulness of credit is what it enables people to do and how much it costs them. A great use case for BNPL is when someone else would have had to take out a payday loan and it’s an item they need or add value to their life. We know people aren’t using BNPL in this way yet.”

Referring to one of the next steps that BNPL may need to take, Gambardella said: “I think affordability reviews have two really important roles to play. The first ensures that the credit the customer takes is affordable. I agree that some people just use it to distribute payments for money they have. Statistics released a few weeks ago suggest that between a third and a quarter of people miss payments or make late payments at some point during their BNPL journey. That’s a pretty high percentage.”

She continued: “The second important thing is that if there is no affordability check, the credit report is not done in a consistent way, which dilutes the accuracy of the credit reports for other lenders. So when people issue credit cards or make loans, they don’t necessarily have a complete picture of the customer’s creditworthiness. This makes it easier for customers to not only take on additional BNPL debt, but potentially take on other forms of debt that they may find difficult to service.”

Noting the importance of disclosing this as a form of recognition, Tapper argued, “I think we use that statement a lot that financial literacy is really important in schools because it means people are making better choices . While that would be great, I think it puts too much of a burden on the consumer. Really, you have to make sure that there is quality information at the point where people are using financial products.”

Referring to future legislation, Spratt stated: “The whole point of the regulation, to protect consumers, is right. When our systems and processes aren’t working as they’re intended, customers should have the right tools. However, a case with the Financial Ombudsman costs £750 regardless of the outcome […] that is not proportionate.”

Spratt continued, “It should be proportionate, it should be fair, it should be on the consumer’s side, but it should include all short-term loan payments.”

Gambardella added that “the top three things I think about are affordability, standardized credit reports and protection for consumers who get in trouble.”

Tapper concluded with a challenge to regulators: “I would also like to urge regulators in general to think a little bit more forward-thinking when it comes to technologies like this.”


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