CCPC Warns Against Misleading Promotion of «Buy Now, Pay Later» as Financial Tool

The Competition and Consumer Protection Commission (CCPC) has stated that «buy now, pay later» (BNPL) schemes are being wrongly promoted as financial management tools. This concern was raised during a meeting with the Oireachtas joint committee on finance and digitalisation, which is examining the increasing popularity of these instalment plans for various purchases including food, clothing, and gadgets.

BNPL providers offer credit by paying retailers directly and then charging consumers interest on future repayments, subject to Ireland's 23% APR cap on consumer credit agreements. Research by the Central Bank indicates that phones, clothing, footwear, and cosmetics are frequently purchased using BNPL. Nearly one in five users reported they would not have made a purchase without this credit option, and over a third did not realize BNPL was a form of credit.

CCPC chairperson Brian McHugh noted that BNPL is more commonly used by financially vulnerable individuals, often leading them to buy unnecessary items or spend more than planned. He highlighted the concerning global sixfold increase in BNPL usage between 2019 and 2023. McHugh emphasized that while payment plans are not new, modern BNPL products are now used for minor daily purchases and marketed as financial tools.

Sinn Féin TD Mairéad Farrell, chair of the Oireachtas committee, expressed concerns that vulnerable consumers could accumulate multiple BNPL loans, leading to debt from late fees and potential damage to credit records through missed payments. The CCPC has initiated awareness campaigns to educate consumers about the risks associated with using instalment plans for small items. For example, Deliveroo partnered with Klarna last year, offering interest-free credit but with fees for missed payments and potential debt collection for unpaid debts.