Who uses Buy Now, Pay Later?
The growth of online shopping and the lingering economic uncertainty due to the coronavirus pandemic have made Buy Now and Pay Later (BNPL) popular payment methods for shoppers. These point-of-sale loan services allow customers to finance their purchases, often at zero or low interest and with no hidden charges. This can ease the financial burden on customers looking to make larger purchases in times of economic uncertainty.
Financial analysis site The Ascent surveyed US consumers about their BNPL habits in July 2020, and again in March 2021. The March survey showed nearly 50% growth in the use of BNPL services in less than a year (37.65% of consumers in July 2020 compared to 55.8% in March 2021), indicating that the popularity of these services is increasing.
The COVID-19 pandemic has also played a role in the use of BNPL by consumers. Sixty-four percent of users say they have used it more since the start of the pandemic. Respondents indicated that they chose the BNPL option during the pandemic to save money in an emergency, because they did more shopping and because they lost income and still had to make purchases. purchases.
Age can also play a role in the popularity of BNPL use. Ascent polls showed a 62% growth in consumers aged 18 to 24 using a BNPL service; by March 2021, 61.61% of this age group had used a BNPL service. The study also showed a 20% increase in the number of users aged 25 to 54 during the period July 2020 to March 2021, with 60.08% of this group having used a BNPL service. Respondents over the age of 55 showed 98% growth during this period, but as of March 2021, only 41% of those consumers had used a BNPL service.
However, there are some drawbacks to entering into a finance agreement for purchases. Almost a third of the respondents (31.36%) either made a late payment on a BNPL agreement or incurred late fees. This was more common among younger respondents, as 47.45 percent of 18-24 year olds reported making a late payment or facing a fee. Additionally, 36.38% of respondents say they are very or somewhat likely to be late with a BNPL payment in the next year. In addition to charging late fees, BNPL service providers report late payments to credit reporting agencies, which could have greater financial consequences for consumers down the line.
Despite the risks, some consumers believe BNPL’s services could replace their credit cards. The survey showed that 27.42% of consumers would like BNPL’s services to replace their credit cards, while 34.95% would continue to use their credit cards even if BNPL could replace their credit cards. Almost 44% of respondents who have used a BNPL service say they do so more often than they use credit cards.