Consumers around the world are confining themselves to their homes and feeling the urge to invest in luxury items and home improvement projects to spruce up their surroundings — despite economic concerns.
This has led to growing interest in buy now, pay later (BNPL) installment payment options for both debt-wary consumers as well as retailers looking to encourage online browsers to buy.
More than 15,000 brands and merchants are in fact offering or planning to offer BNPL plans. These plans are giving consumers confidence that they can afford to finish redecorating their living room or buy that piece of art they’ve had their eye on. BNPL payment volumes are even expected to increase in the next three years by at least 54 percent while credit card payments volume is predicted to fall.
In the latest Buy Now, Pay Later Tracker®, PYMNTS analyzes the impact of BNPL adoption around the globe, particularly since the pandemic shut down retail stores and consumers shifted en masse to online shopping channels. The Tracker also considers the rise in mobile shopping and the future of BNPL use on mobile devices as customers expand their use of this channel.
Developments From Around The World Of Buy Now Pay Later
BNPL services are capturing appeal in many corners of the globe, including India, where eCommerce giant Amazon is launching BNPL services. Amazon Pay Later plans to extend instant credit to consumers who buy electronics, clothing and other items. The service will allow customers to arrange equated monthly installments (EMIs) through a bank of their choice or have the option of repaying any remaining balance at any time without incurring any fines. Customers who use the service frequently and develop a strong track record will receive additional credit.
Cash-strapped consumers in Australia have been turning to BNPL as an option for buying essential items during the pandemic. A recent study shows that 30 percent of Australians are relying on BNPL plans to buy goods in installments, and many of these items include essentials such as groceries and food. Clothing purchases are considered the most common at 30 percent of BNPL payments, followed by groceries, food and beverages at 12 percent. The spike in reliance on BNPL plans comes in tandem with a rise in unemployment.
A Toronto-based fashion retailer has also made inroads with the BNPL approach. Groupe Dynamite recently began offering its customers the option of making interest-free payments for their purchases. The retailer announced it was partnering with a solution provider to release a BNPL option for shoppers at dynamiteclothing.com or garageclothing.com. The program allows customers to pay in four interest-free installments every two weeks to pay off bills for goods of $35 or more. The retailer joins a growing number of Canadian companies now offering flexible installment payment plans to drive conversion rates and improve customer engagement.
How BNPL Can Help Convert Debt-Wary Browsers To Buyers
Many consumers are turning to home improvement and DIY projects while spending more time indoors amid the pandemic. Living and working at home with little hope for a summer vacation is leading many consumers to consider how to sensibly spend on home improvement items without breaking budgets. The increase in online browsing in March is evidence of this spike in interest. Retailers’ greatest challenge is finding ways to encourage the customer to worry less about spending, however.
In this month’s Feature Story, David Sasson, president and CEO for online art retailer OverstockArt.com discusses how BNPL helps boost conversion rates by providing a comfort level to suit debt-wary consumers.
Many consumers are tightening their budgets in recent months amid public health concerns, high unemployment and an uncertain future. This has created appeal for BNPL programs that provide attractive no-interest installment plans for furniture purchases, and home improvement and gardening supplies. Retailers who stand to benefit most from this wave of consumer interest in home improvements are offering promotions that will keep customer demand strong into the fall and beyond.
To learn more about how BNPL can help build consumer confidence in spending during these uncertain economic times, visit the Tracker’s Deep Dive.
About The Tracker
The Buy Now, Pay Later Tracker®, a PYMNTS and Afterpay collaboration, brings you the latest news and research from the buy now, pay later and retail space. It features expert analysis regarding changing payment trends as well as insights from top insiders within the retail and fashion industries.