B2 reading: Buy now, pay later

A pair of trainers for £120 sounds expensive. Four payments of £30, with nothing to pay today, sounds much more manageable. This is the simple appeal of "buy now, pay later", a form of short-term credit that has spread rapidly across online shops in recent years. At the checkout, alongside card payments, shoppers are offered the option of splitting the cost into instalments, usually over six or eight weeks, and often without paying any interest.

For many users, buy now, pay later works exactly as intended. Someone who needs a new washing machine but gets paid at the end of the month can spread the cost without paying the high interest charged on a credit card. Because the application takes seconds and rarely involves a detailed credit check, it is also available to young people who have not yet built up a credit history.

Yet that very ease is what worries consumer groups. Critics argue that it makes spending feel painless and encourages people to buy things they would otherwise have decided against. Research by consumer organisations has found that a significant proportion of users have bought something they could not really afford, and that some have used one such service to pay off another. Because several small payments to different companies are easy to lose track of, a shopper may only realise how much they owe when several instalments are taken from their account in the same week.

Missing a payment can also be more serious than it first appears. Some providers charge late fees, and unpaid debts may be passed to collection agencies and damage a person's credit record, making it harder to get a mortgage or a phone contract in future. Many users are unaware of this, partly because the services are marketed as a convenient way to pay rather than as borrowing.

Retailers, meanwhile, have good reasons to promote these services. Studies suggest that offering them increases the number of shoppers who complete a purchase and raises the average amount they spend. The shop usually pays the provider a fee for each sale, which is why the service can be free for a customer who pays on time.

In several countries, governments have begun to regulate the sector, requiring providers to check whether customers can afford repayments and to explain the risks more clearly. Supporters of the industry warn that heavy regulation could push people towards more expensive forms of credit.

For individual shoppers, the advice from financial experts is straightforward. Treat buy now, pay later as what it is: a loan. Before agreeing to it, ask whether you would buy the item if you had to pay the full price today. If the answer is no, splitting the payment is unlikely to make it a better decision.