Following the news that the US-based buy now pay later (BNPL) startup Affirm has entered the UK market;
Phoebe Hodgson, Associate Analyst, Banking and Payments at GlobalData, offers her view:
“The BNPL market in the UK is becoming increasingly saturated. According to GlobalData’s 2024 Financial Services Consumer Survey*, only 21% of respondents in the UK have used an online BNPL service while buying goods and services. This limited adoption, coupled with an already concentrated market, where 75% of the UK market is held by five BNPL providers, suggests Affirm may find it challenging to position itself among the well-established competitors like Klarna, PayPal and Zilch.
“Affirm’s unique selling points, such as extended loan periods and strategic partnerships, could help distinguish it, but it will have to overcome significant obstacles. One of the biggest hurdles is the evolving regulatory environment. The UK government seeks to regulate the BNPL product further, treating it as if it were a credit product, subjecting them to stricter consumer protections and potentially reducing the appeal for BNPL for both providers and consumers alike. Soon to be under stricter regulations, Affirm must work under pressure to assert itself among the UK customers, who are more cautious of debt amid high living costs and economic uncertainty. Furthermore, with competitors already moving towards innovative product extensions, and compliance initiatives, Affirm’s market entry may need to be more than just a product push – it must be a strategic positioning exercise to resonate with cautious UK consumers.”
*Global survey conducted online in Q2 2024 among 67,292 consumers across 41 markets globally. The survey explores global consumer behaviors, purchasing preferences, and attitudes across the most important banking products. The UK’s sample is 5,003.
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