This report focuses on the UK market for point of sale, or POS, finance. Also known as retail finance, in-store credit, store instalment credit or Buy Now Pay Later (BNPL), it refers to loans provided by, or on behalf of, a retailer to enable a consumer to make a specific purchase.
This new edition of the report has been updated and extended to take into account recent growth in the market and to revise our market size and growth estimates.
The report quantifies the market size in loans outstanding, new lending and loan provider revenues, historical growth rates and levels of industry profitability. It segments the market between conventional POS finance and BNPL.
Objectives of the report
This report aims to answer a series of questions on the POS finance market:
- How does the market work? What changes have there been recently?
- What would be the impact of an interest rate rise?
- Which types of retailers use it most frequently?
- How does it compare with alternative and substitute forms of finance?
- What role has new technology played in the market?
- What is the market size and historical growth rate, in terms of total loans outstanding, new lending and lender revenues?
- What are the risks to future market growth?
- How does the market compare with those in other countries?
- Who are the main finance providers and principals, which are most widely used by retailers, how have they performed?
- In simple terms, what do they each do, who do they work for and how do they operate?
- What do the leading UK retailers do - to what extent do they use this form of finance, how do usage patterns vary by sector, which providers does each use and what is the extent of churn?
Unsecured consumer credit for the purchase of specific goods or services can be split between two key segments: Buy Now Pay Later (BNPL) and Point of Sale / Service (POS).
- BNPL: Interest-free split payments for up to around three months, termed Buy Now Pay Later (BNPL) finance. This is a relatively new part of the market having grown rapidly in the past three years.
- POS: Credit agreements typically of 12 months or longer.
It includes purchases of goods from high street stores and online as well as purchases of services from medical, beauty or other providers
Many retailers choose to subsidise the cost of the credit as a promotional expenditure and offer “interest-free credit” or “zero per cent finance”.
It is used by both national retail chains and independent shops, most commonly in the home and furniture, jewellery and electricals sectors.
- Loans are generally set up as personal loans, not secured on the asset and without a lease arrangement.
- Interest-free loans are generally for 3-12 months with an APR of 0% (i.e. no additional fees are charged)
- Charged-for loans are generally for periods of 12-60 months. Where interest is charged, an APR of 15-20% being typical.
Table of Contents
- About the Market
- Legal structure of POS finance solutions
- Definition of credit
- Interest-free exemption
- Section 75
- Summary
- Market structure - POS
- Role of retailers
- POS products
- Interest options
- Interest-free subsidies
- Payment arrangements and risk
- Who offers POS finance?
- Conventional POS finance via physical stores
- Conventional POS finance via E-Commerce sites
- Conventional POS finance via medical and other professional practices
- Total conventional POS
- Local case study: Salisbury
- Adjacent markets include store cards and credit accounts
- Store cards and credit accounts
- Credit cards
- Personal loans
- Car finance
- Small business POS
- Market structure -BNPL
- Customers
- BNPL products
- Lending decisions
- Market entrants and other developments
- Customers
- Regulation of POS / BNPL
- Regulatory requirements
- Obtaining FCA authorisations
- Changes to regulation
- Market size and growth
- Market size by loan books
- Market size by volume of new lending
- Market size by volume of lender revenues
- Segmentation
- Impact of BNPL on conventional POS
- Market drivers
- GDP
- Retail sales
- Internet retail
- Consumer confidence
- Credit card penetration and spending
- Consumer borrowing
- Interest rates
- POS loan books as a proportion of retail sales
- Lender yields
- Impairment rates
- Forecasts
- Key drivers
- Economic growth
- Inflation and interest rates
- Retail sales
- Consumer borrowing
- Impact of regulation of BNPL
- POS market forecast
- Market size by volume of new lending
- Market size by loan books
- Market size by volume of lender revenues
- Market risks
- Deterioration in UK economic performance
- Significant interest rate rises
- Other market risk factors
- Competitive risk: Amazon
- Competitive landscape
- Overall market shares by lender
- Finance penetration rate by sectors and leading retailers
- Source: Apex Insight Analysis Brokers
- Deko (NewDay)
- Description
- History
- Product
- Financials
- Key clients
- Other brokers
- Platform providers
- Key lenders
- Barclays Partner
- Description
- History:
- Products
- Financials
- Key POS Clients
- BNP Paribas Personal Finance (Creation Consumer Finance Ltd)
- Description
- History
- Financials
- Key POS clients
- Clearpay
- Description
- History
- Financials
- Key Clients
- Novuna
- Description
- History
- Products
- Financials
- Key clients:
- Home Retail Group
- Description
- History
- Financials
- Ikano
- Description
- History
- Financials
- Key clients
- Klarna (including Close Brothers Retail Finance)
- Description
- History
- Close Brothers Retail Finance
- Financials
- Key clients
- Laybuy Holdings
- Description
- History
- Financials
- Key clients
- OMNI Capital Retail Finance Ltd
- Description
- History
- Financials
- Clients
- Etika Finance (afforditNOW)
- Description
- Financials
- Key clients
- PayPal
- Description
- Products
- Financials
- Key clients
- Rematch Credit (DivideBuy)
- Background
- Products
- Financials
- Customers
- Secure Trust
- Description
- History
- Products
- Finance
- Key clients
- Shop Direct
- Description
- History
- Products
- Finance
- Other lenders
- Bumper International
- Buyline Limited
- Caledonian Consumer Finance
- Carnegie Consumer Finance
- First Senior Finance Limited
- Humm
- Lending Works Limited
- Openpay
- Pay Later Financial Services (Fly Now Pay Later)
- PayitMonthly Limited
- Payment Assist
- Premium Credit
- Propensio Finance
- Shawbrook Bank
- Skytech Capital
- Snap Finance Ltd. (Pay Weekly)
- Social Money Ltd (Payl8r)
- Specialist Lending Ltd (Duologi)
- Splitit Capital UK
- Tabeo
- Tandem Money (Allium Lending)
- Tymit Limited
- Wesleyan Bank
- Zilch Technology
- Zip
- New entrants
Companies Mentioned (Partial List)
A selection of companies mentioned in this report includes, but is not limited to:
- ApptoPay
- Auto Serve Finance Limited,
- Azule Limited
- Barclays Partner
- Caledonian Consumer Finance
- Carnegie Consumer Finance
- Clearpay
- Close Brothers Retail Finance
- Deko
- Divido Financial Services Ltd.
- First Senior Finance Limited
- Funeral Safe
- Hitachi Capital
- Home Retail Group
- Ikano
- Laybuy Holdings
- Lending Works Limited
- NewDay
- OMNI Capital Retail Finance Ltd
- Pay Later Financial Services (Fly Now Pay Later)
- Paybreak Limited (afforditNOW)
- PayitMonthly Limited
- Payment Assist
- PayPal
- Paysafe Financial Services
- Premium Credit
- Propensio Finance
- Rematch Credit (DivideBuy)
- Secure Trust (V Retail Finance)
- Shawbrook Bank
- Shop Direct
- Snap Finance Ltd. (Pay Weekly)
- Social Money Ltd (Paylr)
- Specialist Lending Ltd (Duologi)
- Splitpay
- Tabeo Broker
- Tymit Limited
- Wesleyan Bank
