Customers turning to different funds akin to purchase now pay later

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Your help makes all of the distinction. Learn extra Customers more and more turned to “different” methods to pay in 2024, akin to purchase now pay later strategies, based on the British Retail Consortium (BRC).

Its annual funds report discovered that different funds, which embody purchase now pay later (BNPL) schemes, accounted for 3.8% of transactions in 2023, rising to 4.1% in 2024.

The report steered that rates of interest charged on bank cards may very well be pushing some shoppers in the direction of different cost strategies “as retailers supply extra cost decisions and short-term interest-free credit score choices at level of sale”.

As a share of complete turnover or gross sales, different funds grew to five.0% in 2024, up from 3.2% in 2023.

The typical transaction worth for different funds additionally elevated considerably, rising from £19.57 in 2023 to £37.55 in 2024.

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Various cost sorts coated within the report additionally embody cheques, retailer playing cards, present vouchers and platforms akin to PayPal.

A report from banking and finance physique UK Finance lately discovered that BNPL companies noticed notable progress final 12 months, with one in 4 (25%) UK adults utilizing them, up from 14% the 12 months earlier than.

BNPL is usually a handy means for some buyers to separate funds with out paying curiosity, however considerations have been raised about some BNPL debtors doubtlessly overstretching themselves financially and incurring expenses for loans they can't afford to pay again on time.

In July, the Monetary Conduct Authority (FCA) launched a session into BNPL, proposing guidelines to offer shoppers extra transparency over what one of these borrowing entails, to take impact when BNPL comes underneath the FCA’s remit subsequent 12 months.

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The brand new oversight by the FCA would give BNPL debtors key protections that exist already for different varieties of lending. Debtors may also have the ability to complain to the Monetary Ombudsman Service if one thing goes flawed, underneath its proposals.

Ultimate guidelines are anticipated to be printed in early 2026 and from Could 2026, companies with out related shopper credit score permissions will have the ability to register for the momentary permissions regime, two months forward of regulation beginning on July 15 2026.

The BRC report additionally mentioned that purchases made with bank cards accounted for 18.1% of turnover/gross sales, down from 19% in 2023, “a continuation of a downward pattern since 2021 after they reached 22.5% of turnover/ gross sales”.

The report added: “Bank cards accounted for 12.6% of all transactions in 2024, a major drop from 14.2% in 2023.”

Spend per transaction on bank cards elevated barely from £30.24 in 2023 to £30.47 in 2024, which the report mentioned “could mirror excessive inflation”.

The report added that debit playing cards remained the “main selection for many shoppers in 2024, accounting for 64.1% of all card transactions and 66.1% of turnover by gross sales, down barely from 66.7% in 2023”.

The typical transaction worth of purchases made utilizing debit playing cards was £23.26, which was unchanged in contrast with 2023 however down from £27.12 in 2020.

The report mentioned: “This implies shoppers proceed to make use of debit playing cards for smaller purchases for budgeting functions and proceed to shift from dearer manufacturers as they search to maximise spending energy.”

Some buyers have been turning to money in recent times to assist them steadiness their budgets amid the cost-of-living squeeze.

However the BRC mentioned that 2024 marked a slight decline in money utilization.

In 2022, money accounted for 18.8% of transactions and in 2023 it made up 19.9%.

However by 2024, money as a share of all transactions dropped barely, accounting for 19.2%. The typical money transaction worth in 2024 was £13.65, up from £12.82 in 2023.

The BRC additionally highlighted the price of processing card funds, saying that, at £1.48 billion, the charges paid by retailers have greater than doubled since 2019.

Knowledge for the BRC funds survey was gathered in 2025 and covers the 2024 calendar 12 months. Retailers participating accounted for round a 3rd (34%) of all UK retail annual gross sales turnover, the physique mentioned.

Chris Owen, funds coverage adviser on the British Retail Consortium, mentioned: “As rates of interest peaked in 2024, using bank cards fell as clients switched to decrease curiosity types of cost.

“Nevertheless, with playing cards nonetheless accounting for the overwhelming majority of transactions and card charges now greater than double the extent they had been six years in the past, solely a long-term cap on card charges would deliver much-needed aid to retailers.”

Sam Richardson, deputy editor of Which? Cash, mentioned: “With plenty of households persevering with to really feel the pinch, it’s unsurprising {that a} rising variety of shoppers want to unfold funds for purchases.

“Lengthy-awaited regulation of the purchase now pay later market is ready to return into pressure in July subsequent 12 months. With extra individuals turning to this cost technique, this will’t come quickly sufficient.”

Listed here are the proportion shares of transactions utilizing totally different cost strategies in 2024, based on the BRC:

Money, 19.2%

Debit playing cards, 64.1%

Bank cards, 12.6%

Various funds, 4.1%

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Customers turning to different funds akin to purchase now pay later – BRC report

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