Small Restaurants Jump on BNPL Bandwagon, Study Reveals

While buy now, pay later (BNPL) options may not typically be associated with the restaurant industry, Main Street eateries are looking to leverage these payment capabilities to keep customers coming through the doors even as financial concerns mount.

Findings from this month’s study, “Main Street Merchant Index: Optimism Amid Inflation Edition,” a PYMNTS and Melio collaboration, revealed that while only 8% of food, entertainment and accommodation businesses currently offer BNPL, a full 25% plan to implement BNPL in the next year.

Get the report: Optimism Amid Inflation Edition

While the payment options may be just beginning to penetrate the restaurant industry, providers are taking note. In addition to virtual BNPL cards that work at restaurants, some of the leading providers have also partnered specifically with restaurants. Bringing the payment option to the restaurant space allows restaurants, which typically offer a more expensive option than meals prepared at home, to continue to bring in sales in the face of economic anxieties.

Indeed, consumers are worried about their spending, revealed findings from the December edition of PYMNTS’ Reality Check: The Paycheck-To-Paycheck Report, created in collaboration with LendingClub. The study found that, in October, 82% of consumers were concerned about inflation increasing the cost of living.

Moreover, 40% of consumers reported feeling pessimistic about the economy, and the share of consumers with this grim outlook creeped upward every month from May to October.

“What’s really resonating with them is this transparency, this clarity up front that they know exactly what they’re getting,” Affirm President of Technology, Risk and Operations Libor Michalek told PYMNTS in an interview. “They know what it’s going to mean for their pocketbook and what it’s going to mean over the longer period.”

Read more: Affirm President Says Consumers Turn to BNPL for More Flexibility and Transparency

A significant share of financially concerned consumers are using BNPL options for their retail purchases, according to data from PYMNTS’ September 2021 study “The Second-Chance Consumer: How Buy Now, Pay Later Payments Create New Merchant Opportunities,” created in collaboration with Sezzle. The results showed that 17% of consumers who live paycheck to paycheck but are comfortable and 23% of consumers who live paycheck to paycheck with difficulty have used BNPL options.

Get the study: How Buy Now, Pay Later Payments Create New Merchant Opportunities

While for now the method is most common for retail purchases, experts predict BNPL will soon become more common in other sectors.

“Anything that gets back to aligning expenditure with cash flow I think is good for consumers,” PayPal Vice President of Global Pay Later Products Greg Lisiewski said in a PYMNTS TV interview in October. “And you’ll start to see these solutions penetrate other non-retail verticals but big spend categories.”

See more: BNPL Is ‘Humongously Important’ Tool for Non-Retail Merchants