The government announced new rules aimed at immediate use of purchases and later payment services and said it hopes to end the unregulated lending of the “Wild West”.

Under the plan, lenders will have to make affordable checks to stop people from taking too much debt and shoppers will get refunds faster.

Use Buy Now, Pay Later (BNPL) has surged recently, with 11 million people in the UK using it last year, but people are worried that some people spend more than they can afford.

Consumer groups welcome the move and say many users are not aware that they are taking on debt and that they may have a hard time paying it back.

Under BNPL, instead of paying the full purchase in one lump sum, shoppers allocate payments to smaller payments in a short period of time, usually only weeks or months.

For some, this may be a convenient way to spread the cost of shopping, but some consumers may be overly debt.

BNPL products are currently unregulated, and citizen advice says the new measures are a "critical step" to provide shoppers with better protection.

“For too long, people have been exposed to debts from the BNPL division that operates in the gray areas,” said Tom MacInnes, policy director for citizen consultation.

"For some, this has terrible consequences. Many are working to repay credit they can't afford, falling on basic bills, often requiring urgent support, such as food bank vouchers."

Measures to tighten the industry’s over the years have been discussed, with the former government announcing plans in 2023.

Under the latest plan to take effect next year, the government said BNPL companies will have to adhere to consistent standards so that shoppers know what they are registering for, whether it is affordable to buy and how to get help if they need it.

It said that means “pre-checking of affordability, faster speed of refunds and the right to complain to the Financial Ombudsman.

Treasury Economic Secretary Emma Reynolds said the BNPL "turned into multi-million dollar shopping" but suffered consumers from the "Wild West" exposure and operation.

“These new regulations will protect shoppers from debt traps and provide the industry with the certainty needed to invest, grow and create jobs,” she added.

Last week, a comprehensive investigation by the Financial Conduct Authority (FCA) of the UK financial regulator found that the use of BNPL "has risen sharply", climbing 2 million in the past three years.

It says 40% of lonely parents and 35% of women aged 25 to 34 use BNPL products.

Lisa Webb, which one is a consumer law expert? The Consumer Association said its research shows that “many users are not aware of the prospect of losing payments they are taking on debt or considering the prospect of losing payments.”

Klarna is one of the largest providers of BNPL services in the UK, and the company has supported regulation in the industry since 2020.

"It's great to see the advancement in regulation and we look forward to working with the FCA to protect consumers and encourage innovation," he said.