Buy now, pay later (BNPL) methods have reached new heights in the past year as consumers have kept flexible, digital payments front and center during transactions. Many consumers say BNPL can help them manage their payments and extend their purchasing power, including when purchasing big-ticket and luxury items.
BNPL’s appeal to merchants is equally palpable. They recognize that consumers are more likely to make purchases rather than just window shop when BNPL is available — and that they tend to spend more money when merchants offer it, too. Much of BNPL’s use to date has occurred online, but boosting in-store usage could be simply a matter of smoothly integrating the method into the point-of-sale (POS) experience.
These are just some of the key findings in BNPL And The In-Store Opportunity: Why Merchants Must Offer Payment Flexibility At The POS, a PYMNTS and Zip collaboration, which examines consumers’ views about BNPL as a payment option for both online and in-store purchases. We surveyed 2,025 consumers in the United States about their usage of BNPL as a payment method at four retail categories: big-box stores such as Home Depot and Best Buy, department stores including JCPenney or Kohl’s, luxury and specialty retailers such as Tiffany or Perfumania, and local businesses including gift shops, bakeries and hardware stores. We asked consumers whether they would be more likely to use BNPL for in-store purchases if it were made available, and how offering it would affect their perception of a merchant.
• BNPL usage is much higher online than it is at physical stores. Nearly 10% of consumers who made luxury and specialty store purchases online used BNPL during their most recent transactions, while just 1.8% of in-store luxury and specialty shoppers reported using it. This trend toward considerably greater use of BNPL online than in stores occurred across all the retail segments surveyed.
• Sixty-six percent of bridge millennial and millennial consumers say they have a positive view of luxury and specialty retailers that offer BNPL as a payment option both online and in-store. The findings indicate the opportunity merchants have to increase the benefits they realize from promoting BNPL by tailoring promotional efforts directly to the demographic groups, including consumers in or entering their peak earning years, that are most interested in the payment method.
• Forty-six percent of department store customers say they would switch to another retailer that offered BNPL as a payment option. The data illustrates what is at stake for merchants that miss out on this opportunity. Merchants that offer BNPL can use it to differentiate themselves in the marketplace and draw customers away from the competition.
BNPL’s recent growth can be attributed to its growing ubiquity across retail segments and its use for online transactions. Now, merchants have an opportunity to extend BNPL’s growth further by promoting it to in-store customers. As BNPL is promoted more aggressively, in-store use is all but certain to rise, helping merchants generate greater sales volumes and increase profits.
To learn more about the steps merchants can take to increase usage of BNPL options by in-store shoppers, download the report.