The cost of living is rising. Inflation is at its highest rate for 30 years. And it’s hurting young women, who face historically high housing and living costs. Enter: buy now, pay later (BNPL) – a phenomenon that allows young people to buy things they can’t afford. Thirty-nine percent of R29 readers say they have used a buy now, pay later service. Is this a radical initiative to help young people manage their money and buy what they want (as providers argue) or a way of getting young people into debt by spending frivolously? Refinery29 investigates. In our series Paying For It, this week we will be hearing from the women who use BNPL services.
Twenty-nine-year-old Ruby* works in health support services for young people in London. She earns around £30,000 a year and began using buy now, pay later (BNPL) three years ago. Ruby has ADHD (attention deficit hyperactivity disorder) and says that BNPL has exacerbated her issues with impulse control.
Ruby doesn’t use BNPL to buy expensive things. "The first time I used it was for a £50 ASOS order," she explains. "I started using it because, I suppose, I have a really bad relationship with money. I am always overdrawn and owing money. So BNPL was a way to buy stuff that I couldn’t afford."
The list of things Ruby has bought using these payment deferral schemes ranges from trainers to knitwear, from sunglasses to birthday presents for friends and family. She estimates that she has now spent "a couple of thousand" in total with BNPL and has used most of the major providers, including Klarna and PayPal (which offers an interest-free loan that lets consumers split eligible purchases between £30 and £2,000 into three equal payments).
Over time, Ruby’s relationship with BNPL has evolved to become problematic. "It became a bit addictive if I’m honest. At first it’s exciting because it means you can buy things that you wouldn’t otherwise be able to but you can forget that BNPL is actually a form of credit."
"The thing that really appealed to me at first with BNPL was how quick it is. A credit card application isn’t immediate in the same way. My main issue is impulsivity and BNPL feeds into that."
Shopping addiction is a clinically recognised psychological condition. Ruby says she was brought up by her parents to prioritise saving and limit spending on luxuries. She believes that her ADHD has exacerbated her issues with BNPL because it feeds into the instant gratification that shopping can offer. "I am exceptionally impulsive," she says. "I want to find my dopamine fix really quickly so shopping hits the spot."
ADHD is associated with impulsiveness and risk-taking as well as feelings of restlessness and impatience.
"My spending goes hand in hand with my emotional wellbeing," Ruby continues. "At the moment I’m in an okay emotional place but I always spend recklessly. It just gets worse when I’m particularly unwell."
Saving is a challenge for Ruby. "I think BNPL has allowed me to buy things that other people would get by saving and I don’t necessarily think this is good because it hasn’t helped me change my habits. I don’t wait for birthdays or Christmas if I want something nice now."
Missed payments are the devil in the detail of BNPL as they can incur interest and charges for users and negatively affect their credit rating. When it comes to using BNPL services, everything is fine until it’s not.
"I’ve been tripped up a few times," reflects Ruby. "I have forgotten about payments in the past and ended up with debt collectors at the door. If your bank card details change and you accidentally miss a payment it can really come back to bite you. That’s how these companies make their money. They make their money from people who don’t stay on top of it."
I have forgotten about payments in the past and ended up with debt collectors at the door.
On balance, Ruby thinks that BNPL is "exploitative". She thinks that these services prey on people who might be financially "naive", as she puts it.
BNPL raises big and important questions in Ruby’s eyes. "We live in a capitalist society," she says. "I would never criticise someone for using a BNPL service because this is the world we live in, stuff is expensive and I’ve used them. But I do worry that if the cost of living rises then people will rely on them more and they shouldn’t ever be a necessary way of funding shopping. I think people should be earning enough to pay for basic things but even on my salary I don’t have that much to save and some people earn a lot less."
Ultimately, Ruby is concerned. "I’ll be alright but I worry that, for some people, BNPL is the only way that they can afford to buy Christmas presents or even basics like toiletries. That is the fundamental issue here."
When all is said and done, Ruby thinks that ordinary people should be paid properly and that "massive corporations should be taxed more". For her part, BNPL is a symptom of bigger economic problems. "I don’t think we should be shaming low-income people for using it," she concludes.
*Name changed to protect identity
*This article was updated on 24.02.22 to reflect the difference between Paypal Credit and Paypal "Pay In Three".