Buy now, pay later firm Laybuy collapses into administration - what it means for customers

Buy now, pay later firm Laybuy has gone into administration. It is the first 'buy now, pay later' company that has collapsed.

A notice on the Laybuy website reads: "Payment services are currently suspended across all regions. This impacts our customers ability to create new orders online and in store.

"During this time, all existing orders will be processed as normal. We'll share more information as soon as we can."

The firm has more than 300,000 users in the UK and allows customers to spread payments over six weeks, without paying interest. However, Laybuy does charge a £6 fee if your payment is late, and a further £6 if it's still unpaid seven days later.

Shoppers can also be referred to a debt collection agency if you're more than 42 days in arrears, with Laybuy also reporting data to Experian. So if you miss a payment, it would show on your credit report, reports the Mirror.

Laybuy disabled its website in mid-June, but now the news of its collapse has been confirmed. FTI Consulting is said to be handling its administration process.

Sam Ballinger, joint administrator at FTI Consulting, said: "The joint administrators are currently assessing the options available to the companies and supporting the employees, merchants and other affected stakeholders through this difficult period. Laybuy is not currently accepting new transactions, however, customers should continue to make payments as normal."

What does this mean for users?

According to Raisin UK data, it’s thought around 484k UK customers will be affected by the administration - the first of its kind for 'buy now, pay later'. The lender had disabled its website and app, with customers unable to create accounts or receive/make payments.

In a notice by the lender, Laybuy confirmed its services were suspended, including all payment options. Kevin Mountford, a financial expert and co-founder of the platform Raisin UK, issued this urgent advice for Laybuy customers.

“At present, the administrators are not accepting any new transactions for Laybuy, however, it is critical that customers continue to make their repayments as normal," he said.

“The administrators will be actively working to explore options as to whether a sale of the business can be achieved, and in this case, your debt would be sold on and transactions would need to continue as normal as you would be expected to have made all your payments.

“This news will be incredibly frustrating for their customers across the globe and will be unsettling news for the thousands of users in the UK who have used Laybuy for purchases from leading retailers like Amazon, Marks & Spencer and Next.

"It also will further add to calls for Buy-Now-Pay-Later platforms to face better regulation to help protect customers if another provider were to collapse in the future. With BNPL platforms continuing to contribute to credit scores, this uncertainty will cause significant concern for their users.”

Missed payments will still incur late fees, while payments more than 42 days in arrears may be referred to a debt collection agency. You won't be able to reopen a closed account.