Instalments will allow Amazon customers to spread the cost of qualifying items over as little as three months, or as much as two years after purchase.
Rob Levy, head of Instalment payment products, clarified that BNPL will be available on millions of products costing £100 or more across the Amazon website.
Amazon launched Instalments in Germany last year and are now looking to make the most of the growing popularity of BNPL services in the UK.
A survey by the Financial Conduct Authority (FCA) reveals that since the start of the pandemic, more than 5 million people in the UK have used a BNPL service. It is often favoured by younger people who may not have a credit card.
Contrary to other popular BNPL services like Klarna, however, Instalments is not interest-free.
BNPL may be gaining popularity, but isn’t without risk
Despite millions of shoppers turning to BNPL schemes, the FCA have raised concerns about the payment method. They believe it could be a debt trap for many low-income younger people.
The government has tasked the FCA with regulating BNPL schemes, but formal regulations aren’t expected to take effect until late 2022 or early 2023.
Myron Jobson, personal finance campaigner for Interactive Investor, has discussed how BNPL schemes fall neatly into the “YOLO (you only live once) culture we live in”.
As a payment method, BNPL provides instant gratification, and Jobson equates it to that of a drug that encourages consumers to buy things they cannot afford.
Indeed, reports suggest debt collectors have chased 10% of all BNPL shoppers, rising to 12.5% of young people using the service.
Jobson calls for clearer communication between BNPL providers and consumers, adding that providers should make it “crystal clear” to consumers that missed payments will have severe consequences.
Only 11% of BNPL retailers warn shoppers that they are taking on a credit agreement, with the remaining 89% leaving this information in the small print or T&Cs.