More retailers are making a buy now, pay later (BNPL) option available at checkout, as they are finding that the increasingly popular payment method allows them to sell to customers they otherwise may not be able to reach.
Among those customers are those who do not have credit cards. Thirty-eight percent of all consumers who do not have credit cards say they choose to avoid them because they encourage overspending, and 34% do so because the cards have high interest rates, according to The New Credit Model, a PYMNTS and Sezzle collaboration that uses data from a survey of 7,024 American consumers.
Get the report: The New Credit Model: Why Financially Worry-Free Consumers Still Want Alternatives to Traditional Credit
Two of three consumer personas identified by PYMNTS — worry-free and second chance — most often say they avoid credit cards because they encourage overspending. The third persona — shut out — most often say they avoid credit cards because they have a low credit score or personal ID/bank problems.
Many consumers are interested in alternatives to traditional credit card payments. About one-fifth of consumers who are aware of BNPL are interested in using it for various day-to-day expenses. Greater percentages of consumers are interested in using BNPL to pay for expensive, one-time retail purchases (47%) and medical bills (29%), but 21% would use it to pay for groceries and 18% would use it to pay for monthly utility bills.
Consumers cite four key reasons for choosing BNPL options. More than six out of 10 say they’re attracted to BNPL because of the ability to purchase without overspending (65%), the fact that they’re more likely to shop at stores that offer BNPL (65%), the ability to purchase more frequently (64%) and the fact that it helps them manage personal spending (63%).
