Millennials carry two fewer credit cards than their Generation X counterparts, for example, and are the single-largest demographic group using BNPL solutions. Eighty-seven percent of consumers aged 22 to 44 have expressed interest in breaking large purchases into monthly installments, making them prime BNPL customers.
This embrace of BNPL payment options is due to several factors, the largest of which is souring moods toward traditional credit options. Approximately 20.3 percent of customers between the ages of 22 and 30 have poor credit, while 18.8 percent have insufficient credit to apply for a card in the first place. BNPL solutions have neither of these issues, as they do not require credit checks nor do they affect credit scores, so long as customers promptly repay their debts.
In the April-May edition of the Buy Now, Pay Later Tracker®, PYMNTS explores the latest in the world of BNPL, including its role in helping consumers during the coronavirus outbreak and how it can potentially help revitalize the outdoor retail industry.
Several major eTailers are partnering with BNPL providers to offer these payment options to their customers. The most recent partnership comes from Afterpay and eBay, which will offer BNPL payment options at all 40,000 of eBay’s Australian small business partners. eBay will cover all transaction fees associated with BNPL use. The eTailer has been seeing record business since the beginning of the COVID-19 pandemic, especially for items that are useful in quarantine, like dumbbells and paint-by-number kits.
Banks are also exploring BNPL options. Investment banking giant Goldman Sachs is the latest entrant on the scene with its new point-of-sale (POS) deferred payment plan, MarcusPay, which enables customers to break payments into monthly installments over 12 or 18 months. This solution differs from most app-based BNPL options because it charges interest, but apart from that has no additional fees. The bank’s BNPL service is currently only available at JetBlue, but it is expected to expand to other vendors soon.
BNPL solutions have even revealed some interesting shopping habits of U.S. consumers: A study of Afterpay’s 4.4. million customers found that 65 percent were millennials or in the Generation Z demographic, and that a majority of its user base lived in metropolitan areas with high costs of living. These users typically made two purchases in the past six months and generally preferred to shop in the morning. This is in contrast to Afterpay’s users in the rest of the world, who typically preferred to shop in the afternoon.
For more on these and other BNPL news items, download this month’s Tracker.
How BNPL Options Help Small Businesses Compete
Small businesses face an uphill battle, with only a third surviving their first 10 years of operation due to a variety of factors including poor sales. The ongoing COVID-19 outbreak and economic downturn will likely only make things worse as individuals have less money to spend at small- to medium-sized businesses (SMBs), but BNPL options could help reduce this barrier and encourage sales by lowering upfront costs. For this month’s Feature Story, PYMNTS spoke with Josh Walker, co-founder of apparel eTailer 1620 Workwear, about how the company’s BNPL offerings have helped its conversion rate, and why others should work to overcome their fear of losing a percentage of sales to BNPL providers.
Millennials are avid fans of the outdoors, with 81 percent of saying they would consider taking up hiking as a hobby. This enthusiasm has not carried over into the outdoor retailer market, however, as they prefer cheaper, more versatile items over the high-margin specialty gear that drives industry revenue. This month’s Deep Dive explores how BNPL solutions can help outdoor gear merchants reduce the upfront cost on their specialty items and convert this enthusiasm for the outdoors into industry growth.
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