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Buy now, Pay Later schemes - benefits and risks

Have you ever spotted the ‘Buy Now, Pay Later’ option when checking out any of your online shopping baskets? In this article we discuss the benefits and risks to consumers.

If, like us, you have done most of your shopping online over the past year, you have probably noticed the rise of “Buy Now, Pay Later” (“BNPL”) options, such as Klarna and Clearpay, as payment options at checkout. In this article we explore what BNPL is, what its benefits are and, crucially, what risks it may pose.

BNPL companies like Klarna and Clearpay operate in the retail finance sector - in other words, they lend to consumers in order to fund retail purchases, such as clothes or furniture. Here are some benefits of the BNPL option: