Why The Pandemic Could Boost Buy Now Pay Later (BNPL)

U.S. consumer spending has plummeted since the COVID-19 pandemic led to worldwide closure of nearly everything. However, our recent Buy Now Pay Later Tracker found that the outbreak could be just the ticket to boost BNPL as a way to bring shoppers back from the brink of financial distress.

BNPL involves buying something on an installment plan of a few payments, often with few, if any, fees or interest charges for the consumer. The concept is to not only make transactions affordable, but seamless.

These arrangements can also allow customers to purchase more or costlier items than they could otherwise, thereby helping merchants. Shoppers can feel more at ease, too, replacing a broken refrigerator or washing machine that conked out right after a consumer lost a job.

BNPL offerings can also ease the costs of smaller ticket items or even help shoppers afford groceries. Perhaps that’s why BNPL providers have seen big increases in business during the coronavirus pandemic.

For example, Afterpay, which operates in the United States, United Kingdom, Australia and New Zealand, recently reported that it served 4.4 million U.S. customers in the company’s fiscal third-quarter ended March 31. That’s up 283 percent from year-ago levels. The company also saw U.S. sales hit $1 billion for the quarter, a 263 percent gain year over year.

Our BNPL report found that while the pandemic might have created more interest in the system, its use was already on the rise in both the United States and Australia even before COVID-19. After all, many younger consumers are wary of traditional credit cards and other loans given that they often earn lower incomes and have less savings than their Generation X or baby boomer counterparts.

They’re also among the most heavily affected by high student-loan and credit-card debt. For example, a recent survey shows that one in three millennials have added to their credit-card debt since the pandemic’s onset.

Afterpay recently noted that 65 percent of its U.S. users are millennials or from Generation Z. This suggests BNPL products have the potential for a strong future.

To read our complete report on BNPL, click here.


New PYMNTS Study: Subscription Commerce Conversion Index – July 2020 

Staying home 24/7 has consumers turning to subscription services for both entertainment and their day-to-day needs. While that’s a great opportunity for providers, it also presents a challenge — 27.4 million consumers are looking to cancel their subscriptions because of friction and cost concerns. In the latest Subscription Commerce Conversion Index, PYMNTS reveals the five key features that can help companies keep subscribers loyal despite today’s challenging economic times.