10th August 2025
Over the last few years, the consumer credit market has been evolving. Old forms of credit have departed from the market in the aftermath of regulatory intervention, while new forms have taken the market by storm.
Deferred Payment Credit (DPC) – more commonly known as Buy Now Pay Later – has grown in popularity and leading providers have become household names. Since its popularity explosion, much attention has been directed towards the market and how consumers engage with it. This short paper is our contribution.
In this report, existing literature on DPC is augmented by analysing survey data from the Bank of England’s NMG Survey to understand the size of the market as well as which households are likely to be using DPC and how much of it they are using. This analysis suggests that most DPC usage does not appear to significantly change consumers’ aggregate outstanding debt and where used appropriately, it can be a genuine substitute to higher cost products.
However, there is evidence to suggest DPC can pose risks to some consumers. Our analysis suggests a subsection of DPC users say they are cutting back because they are worried about accessing credit and those consumers generally have higher debt to income ratios, suggesting heighted vulnerability.
Finally, we discuss several issues and concerns about the future of Deferred Payment Credit complete with a series of recommendations for the Government and regulators. It is concluded that the Government must bring forward its efforts to reform the consumer credit act as a matter of urgency, to protect those on the lowest incomes.
