Study finds T&C’s of popular buy now, pay later apps can take up to an hour to read

Buy now, pay later apps have been taking the world by storm, and are now estimated to be worth £2.7 billion in the UK. While delaying payments may seem useful for security and in many cases offers other benefits depending on the provider and account, credit is always a risk and is one of the main sources of debt worldwide. 

A new study by NerdWallet has analysed Terms and Conditions and Privacy Policies of 11 of the most popular buy now, pay later companies, to reveal how long they would take an average person to understand. NerdWallet also spoke to industry experts to highlight the risks of such apps that users must be aware of to ensure they are using these responsibly and safely.

The average reading rate for a native English speaker is 238 words per minute. Using the number of words in each T&Cs document, the average time-to-read these documents across the 11 services totals over a staggering 36 minutes. 

However, it’s also important to consider the clarity of these documents, which may lead to additional reading times and in this study scored just 60% on average. With such apps being popular among young people, it is important the T&C’s are written in a consumer-friendly way. By analysing the clarity, this study examines how easy it actually is to understand the sentences. 

Take a look at the full table below to see a full analysis of each apps Ts & Cs and privacy policy:  

Klarna tops the list with the longest policy document to read at a staggering 57 minutes

Klarna is one of the most popular buy now, pay later apps, with many retailers offering this form of payment. But it also comes out on top for the longest T&C’s, taking over a staggering 57 minutes, if not longer, with a clarity score of only 48%.

To put the length of these documents in context of how you could be spending your time otherwise, you could fit an episode of The Crown into the same time, or at least 2.5 episodes of popular sitcoms and animated shows like Rick and Morty, The Simpsons, or Friends. 

Considering the risks of pay later

It’s all too easy to skip past long documents and take the advertising at face value, but it’s important to remember that your finances are at risk, and anything you don’t pay upfront you will still need to pay later.

NerdWallet spoke to experts for their advice on what to be aware of before using such services.

John Ellmore, Operations Director at NerdWallet comments:

“With the length and complexity of terms and privacy notices, we shouldn't be surprised if many people click accept without reading or understanding exactly what they’ve agreed to. This may not cause problems for most people, but there is a risk that a customer could agree to something they weren’t aware of if the crucial piece of information was buried in a mass of text.

“Especially as Buy Now, Pay Later schemes grow in popularity, it’s important that providers try to make their terms and privacy policies more concise and easier to read. The fact that some providers, like Klarna, have double the number of words in their terms and privacy policies than other providers, shows that a lot more can be done to make these documents more readable and consumer-friendly. Improving the accessibility of the documents could encourage people to read them in full, helping them to better understand their rights and feel more confident about the service they are using.”

Maurizio Kaiser, Co-founder at ikigai adds:

"Buy Now Pay Later (BNPL) solutions are still a credit solution and can negatively impact one’s credit score and financial stability. Providers should have to educate consumers on the potential risks but unfortunately, they currently fall beyond the remit of the FCA.

“Most importantly, it's crucial to practice mindful spending when using BNPL - do you really want or need what you're buying or is this an impulse purchase? For me, the biggest drawback is that BNPL purchases don’t show up on your online banking, so it is easy to overspend without knowing about it. My advice is to practice financial self-care, and “spending well” is a big part of this - make a monthly budget in a spreadsheet and log all your purchases, even BNPL ones that might not show up immediately on your card."