A new research project led by Swansea University aims to address the challenges faced by shoppers using buy-now-pay-later (BNPL) schemes. The initiative seeks to understand how individuals manage their shopping payments and explore ways to support those most at risk of falling into debt.
Dr Anita Zhao from the School of Management at Swansea University explained, “This project will see us create a toolkit to help financially vulnerable or overindebted BNPL users in South Wales and beyond. We don’t know yet what form these tools will take, but we aim to gain a better understanding of how we can work with debt advisors and those in debt to provide the right kind of support.”
The project is funded by Swansea University and involves collaboration with Dr Philippa Ward and Dr Ruffin Relja from the University of Gloucestershire. The team is inviting people who have experienced debt as well as financial advisors to participate in their research.
Research conducted over the past five years indicates that BNPL services are especially popular among Millennials and Generation Z. These users are typically around 32 years old, predominantly female, and about half have annual earnings below £30,000.
Dr Zhao noted, “Many buyers feel they are merely using their own future money for the purchases and don’t think of it [BNPL] as a form of credit.
“The problem is BNPL is currently not regulated in the UK. Unlike a credit card where a lender receives a monthly statement for all their spending, BNPL is used for individual transactions so a shopper may have made numerous purchases that all require payment of different amounts at separate times.
“This can become very messy. Unless you are financially aware, it is easy to lose track of spending.
“While some users are very positive about the freedom that fintech services, such as Klarna, provide, others who may not be as financially astute are running into difficulties. There is an instant gratification to spending online, but the pain of debt lasts far longer. Those lacking self-control are more likely to be caught in a cycle of pain and vulnerability.”
The research team has established connections with organizations like the Money Advisory Liaison Group (MALG), which brings together groups working on improving outcomes for people with problem debt. They are encouraging both individuals affected by BNPL-related debt and financial advisors assisting them to take part in a survey aimed at identifying effective support strategies.
Dr Zhao said that preventative resources could be particularly useful in areas such as South Wales where economic deprivation is more pronounced.
In addition to developing support tools, the researchers have contributed input on upcoming regulatory changes proposed by the Financial Conduct Authority for 2026. Dr Zhao commented, “Our role as marketing researchers allows us to offer valuable insights into the broader impacts of proposed regulatory changes for both consumers and markets. This area of the market is not regulated at the moment, so these rules could bring greater protection for shoppers.”
Swansea University's School of Management provides further information about its activities online.