Mon, 12 April 2021 | payments credit
Consumers have increasingly adopted Buy Now, Pay Later (BNPL) services for multiple reasons; a desire for financial flexibility, a way to avoid incurring credit card debt, or to purchase items outside of their budgets. However, despite its popularity, consumer debt and missed payments have led to calls for additional research and regulation.
To take a closer look, The Strawhecker Group (TSG) conducted a survey of over 1,500 U.S. consumers in early 2021 with a goal of understanding domestic attitudes and perspectives on the use of BNPL services. TSG found that 39 percent of consumers have tried BNPL, and of those, 55 percent tend to spend more ($312 average spend) compared to other payment methods. Results indicated that most consumers intend to continue using BNPL services, and that trust is high when it comes to the reliability of these products; however, consumers are less confident when it comes to the motivations of their providers.
"We found that one in five consumers believe their buy now, pay later service would take advantage of them," said Jared Drieling, Senior Director of Market Intelligence and Insights at TSG. "Despite the growing trend, most consumers stated a credit or debit card issued through their bank was still the number one most reliable payment method."
Further, a thematic analysis of respondents who do not use BNPL, as well as their reasons for intentionally avoiding these services, showed that consumers can experience psychological discomfort, a lack of familiarity, and financial hardship preventing them from pursuing Buy Now, Pay Later options.
"The future of Buy Now, Pay Later usage suggests an even more nuanced picture, as the retention rates reported by some companies are astonishingly high. For example, Afterpay reported 91% of sales during the first quarter of 2021 were from repeat customers," added Drieling.
Source: The Strawhecker Group