Experts' CornerNews and Events

Shoppers of All Ages and Incomes Use Buy Now, Pay Later Plans

Rising inflation is making shoppers of every age more cautious about spending. Consumers are looking for payment options to help them budget their money and hold on to it as long as possible. So, it’s not surprising that more people are opting to take advantage of buy now, pay later (BNPL) plans. Forecasts by Business Wire predict BNPL transactions will reach $82 billion in 2022—an annual increase of 66.5 percent. When these plans were initially launched, the perception may have been that they were being used by consumers with limited access to traditional credit. However, statistics by Affirm, a financial services company that offers BNPL (point-of-sale installment loans) to consumers, indicate the plans are also trendy among older, well-to-do consumers and younger adults striving to get financially established for a variety of reasons.

  • Spread payments over time (41.9 percent)
  • Ease and convenience (33.1 percent)
  • Trustworthy Credit Provider (31.5 percent)
  • Likelihood of Credit Approval (31.2 percent)
  • Preserve cash on hand (25.5 percent)

The fact is that 61 percent of Americans live paycheck to paycheck. BPNL is a credit tool that users feel is an easy and convenient way to purchase the merchandise they want or need in one transaction. Making monthly payments is a crucial selling point, especially for expensive, big-ticket items. Economic uncertainty has also made people afraid to accumulate debt. Paying interest-free purchases in four monthly payments is attractive to consumers.

Transactions Grow by Double-digits

Affirm, in partnership with, recently released data indicating a surge in usage among baby boomers, seniors, and people with incomes over $100,000. These consumers cite convenience and ease of use as motivators for making repeat purchases. Eighty-five percent of the people transacting business using the company’s platform are repeat users.

  • Forty-six percent of baby boomers and seniors increased their usage of BNPL in the past year
  • Seventy-one percent of BNPL users have incomes over $100,000

The report tracks BNPL usage on a monthly basis. In the last quarter, transactions rose 139 percent. The average user conducted three transactions during the quarter, whereas they had two transactions a year ago. Overall, the transactions per active user rose 31 percent compared to 8 percent in 2021.

Popular with Millennials and Zoomers

It takes time to establish credit among traditional banks and credit card companies. Millions of millennials and Zoomers are just starting their careers and have little to no credit history. Using BNPL as an alternative form of payment enables them to purchase merchandise they could not afford to buy previously. According to Ascent, 45 percent of users make purchases that don’t fit their budget. Usage of BNPL among this demographic increased from 6 percent (2019) to 36 percent (2021).

  • BNPL usage doubled among millennials in 3 years
  • Usage by Gen Xers tripled from 2019 to 2021

Benefits to Participating Merchants

Retailers may ask why they should add another payment option their customers may not have requested. Klarna, a BNPL payment provider, says, “You always get paid in full and upfront; your customers pay at a later date. It doesn’t get simpler. Offering shoppers flexible payments can enable smaller retailers to be more competitive and remain relevant when competing with big boxes for a more significant share of consumer dollars.

Grows Customer Base and Transaction Size

Enabling a more extensive and diverse group of shoppers to purchase big-ticket items such as expensive power tools, grills, and lawn furniture will drive sales. The BNPL payment method will give people without the immediate ability to pay, as well as those who are budget-minded, an incentive to focus more on the benefits of making the purchase and less attention to the immediate cost of goods.

Better Customer Experience

Giving shoppers more control over their payment options can improve the customer experience. When given a choice, consumer satisfaction levels increase. Research conducted by Afterplay, another BNPL provider, indicates conversion rates and incremental sales are 20 percent to 30 percent higher than other payment methods.

Customer Loyalty Increases

When shoppers have a positive experience, they are more likely to return to the store in the future. As mentioned previously, 85 percent of Affirm’s users are repeat customers. Home Improvement retailers count on loyal customers to generate a significant percentage of sales.

Seeing the Big Picture

Offering customers increasingly popular BNPL payment options without having to assume any financial risks is worth considering. Since third-party companies make full payment at the time of purchase, retailers can promote the service as a benefit to encourage consumers to shop in their business. Gaining competitive advantage requires an ability to see the big picture and identify consumer trends that are redefining the retail landscape.

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