Buy now, pay later firm launches digital card to be used in stores

A buy now, pay later (BNPL) firm has launched a “tap and go” digital card in the UK which customers will be able to use in stores to spread the cost of purchases.

Shoppers will be able to buy goods and services in-store using Laybuy with a tap of their digital card on their smartphone.

Until now, the recent growth in BNPL services has been focused on online checkout payment options – but the launch means people can now use Laybuy to pay in-store in six weekly, interest-free instalments, the firm said.

BNPL services may help people to avoid using more expensive borrowing options.

However, the industry generally has faced criticism, amid concerns that some people may end up spending more than they intended and struggle to make the repayments.

Citizens Advice recently found that a quarter of young adults making BNPL repayments had struggled to pay for food, rent or other bills as a result.

The charity has said it is concerned that, for many, such schemes can be a slippery slope into debt and it has called for improved affordability checks generally.

The Government announced in February that interest-free buy now, pay later credit agreements will be regulated by the Financial Conduct Authority (FCA).

Laybuy said it conducts hard credit checks and around 25% of customers are declined. The maximum amount they could spend with it would depend on their credit score.

It said the average age of its customers is 32 and they typically spend £66 per transaction.

If customers miss a payment then they are charged £6 per week, up to a maximum of £24. Laybuy said it would immediately contact a customer if they missed a payment and fewer than 5% of customers pay a late fee.

To use the new Laybuy scheme, customers need to load the card into their smartphone’s wallet through its app.

They can then use it to buy goods and services with Laybuy in the same way they would if they were making a contactless payment using a physical card, or another payment card on their smartphone’s digital wallet.

Laybuy said that initially the scheme will be available to merchants that have a relationship with it, but the plan will be to allow customers to use it at leading retail brands generally in the near future.

It said places where people will be able to use Laybuy include WH Smith and JD Sports.

Gary Rohloff, managing director and co-founder, Laybuy said: “BNPL is becoming incredibly popular in the UK, so we’re delighted to launch ‘tap to pay’.”

Rachel Springall, a finance expert at Moneyfacts.co.uk said: “The pandemic hit consumer finances hard and some may struggle to pay for goods outright but may not want to use a credit card, particularly if they don’t have an interest-free offer.

“It’s important that consumers keep in mind that they will need to plan their repayments carefully to ensure their goods are paid for within their borrowing term.”