IKEA and Afterpay Bring BNPL to Furniture Buying

IKEA has entered the buy now, pay later (BNPL) space with the help of Afterpay.

The world’s largest furniture retailer announced Tuesday (Sept. 19) that Afterpay’s “Pay in 4” service was now available at its stores and website for customers in the U.S.

The program, which lets customers pay for products in four payments over a six-week period, is launching at a time when cost-conscious consumers continue to use deferred payment offerings like BNPL to fund purchases.

“IKEA values our customers and strives to ensure accessibility and affordability” Christine Briganti, financial services deployment project leader for IKEA U.S., said in a news release provided to PYMNTS. “By partnering with Afterpay, we will lower the barriers for our customers to design their dream spaces.”

As reported here last week, deferred payment tools like credit card installment plans and BNPL options have gained popularity among consumers in recent years, offering a convenient way to manage spending and make large purchases more affordable.

According to a joint PYMNTS Intelligence-AWS survey, people use deferred payment plans for three chief reasons: convenience, financial support and the ability to purchase more products. The research found that 28% of consumers had used deferred payment plans in the prior three months, including BNPL and credit card installment plans.

However, the research also found BNPL still lacks some features potential users demand, as 38% of consumers would like to see BNPL offering more and better rewards.

And BNPL also lags credit card installment offerings in terms of in-store availability. Although credit cards are widely accepted, BNPL services still have limited acceptance in physical stores (the new IKEA program notwithstanding).

As PYMNTS wrote, this underscores a need for BNPL providers “to expand their network of partner stores and increase acceptance,” with the study finding that 33% of consumers showed a desire for BNPL to be more widely available in brick-and-mortar retailers.

PYMNTS spoke at the start of the year with Anna Pulante, IKEA’s global payments manager, about the company’s plans to use digital payments — specifically mobile payments — to breathe new life into its model.

“Payments is an enabler,” she said. “Until a customer is able to pay, they’re still a lead in that sense — we haven’t secured them yet as a customer,” she said.

Later in the year, the company announced a partnership with Egyptian FinTech Paymob that allows customers at IKEA Egypt pay by digital wallets, bank-offered easy payment plans (EPP) and consumer finance options, along with cards.

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