The world of retail payments and lending is undergoing a significant transformation with the rise of buy now, pay later (BNPL) services.
As noted in a recent study by PYMNTS Intelligence, one of the key appeals of BNPL is its ability to provide financial flexibility and relief from the constraints of credit card debt, with 73% of Americans actively seeking alternatives to credit cards. Additionally, nearly half have already embraced BNPL as their go-to purchasing strategy.
Younger generations, particularly millennials and Generation Z, who are burdened by credit card debt and high interest rates, are leading the charge in adopting BNPL as their preferred payment option. In fact, 28% of millennial and Generation Z consumers would abandon a purchase if BNPL were not available at the checkout. This shift in consumer behavior is reshaping the retail payments landscape, with BNPL becoming a must-have for shoppers.
Millennials not only lead the charge in BNPL adoption but also shape new shopping norms. Their average spend of $1,851 via BNPL, compared to $1,485 on traditional credit cards, highlights the dominance of BNPL in their purchasing decisions.
BNPL is not only captivating consumers but also captivating marketplaces and Main Street businesses.
FinTech companies are pioneering consumer payment experiences that offer greater financial autonomy, unlocking doors previously closed by traditional credit models. Collaborations between BNPL providers and merchants are fueling a dynamic upgrade to merchant payment solutions, benefiting both consumers and sellers.
To thrive in this evolving retail landscape, merchants must partner with BNPL leaders to understand the nuances of their offerings to ensure seamless integration into customers’ shopping journeys. Educating consumers about the financial advantages, processes and risks of using BNPL through impactful campaigns is also essential to empower shoppers and build loyalty.
Finally, targeted marketing campaigns designed specifically for millennials and Generation Z can highlight the autonomy and flexibility that BNPL brings to purchasing decisions and financial management. That, and ensuring transparency in BNPL promotions, will align brands with responsible financial practices that prioritize consumer financial well-being.