Just half of BNPL users in the UK are aware of late payment fees, with even fewer knowing how much these fees might be, according to research for the LSB (Lending Standards Board).
BNPL usage has soared in recent years, with research by Citizens Advice late last year finding that more than one in four UK adults - 15 million people - predicting that they would use the option to help with festive spending.
New research carried out by RFI Global for non-statutory regulator the LSB, shows that only 52% of BNPL users are aware of late payment fees, and 50% know roughly how much these fees might be before they incur them.
In addition, 15% of BNPL users have incurred late fees, with this figure rising to 22% for those with ‘poor’ or ‘very poor’ credit scores.
The data also reveals that just over a third of BNPL users say they only decide to use the products at the check-out stage, while three-fifths are unaware that such products are unregulated.
Late last year, the UK Government announced plans to introduce BNPL regulations that will bring companies under the supervision of the FCA and apply the Consumer Credit Act.
However, the LSB notes that this will not be in place until 2026 at the earliest.
Emma Lovells, chief executive, LSB, says: "The Government’s announcement on BNPL regulation was very welcome, but in the period before regulation comes in, lenders can’t rest on their laurels.
"More awareness of products and what is required from customers is needed, along with proactive outreach, especially for those experiencing financial difficulty."