Igloo On Payments As A Strategy, Not Just A Way To Pay

Many consumers in Australia, the United Kingdom, the United States and other markets are experiencing financial distress as a result of the COVID-19 pandemic, and spending behaviors are shifting to reflect this. More consumers are spending online rather than making potentially risky trips to brick-and-mortar stores, with online payments in the U.S., for example, growing by 30 percent from March to mid-April. Customers are also paying for their purchases in different ways, with growing interest in alternative payment methods that can provide them more financial flexibility.

Use of payment methods like buy now, pay later (BNPL) solutions is thus on the rise during the pandemic, as customers look for ways to buy essential goods affordably. Retailers are also showing more interest in supporting this type of payment method as consumers abandon carts online or put more of their money toward paying off existing debt rather than making purchases during the COVID-19 pandemic.

In the latest “Buy Now, Pay Later Tracker®,” PYMNTS analyzes the impact of the COVID-19 pandemic on consumer spending and on what they are expecting to see from their relationships with retailers. The Tracker also examines how alternative payment methods such as BNPL can help provide the flexibility customers are looking for during this time, while enabling retailers to finalize the transactions they need to make it through this financially stressful period as well.

Developments From Around The World Of Buy Now Pay Later

BNPL appears to be expanding in popularity despite consumer spending worries in the U.S., where installment payment provider Afterpay is still reporting steady growth. The company now has 4.4 million U.S. customers making use of its BNPL solution for their purchases, according to recent company statements. Many of these customers are also repeat Afterpay users, the company noted, which indicates that the solution may be gaining a grip on consumer payments within the market. BNPL is also becoming more interesting both to consumers and to retailers the longer the pandemic continues, as both deal with rising financial effects to their incomes and their revenues.

Another area where BNPL adoption uptake appears to be increasing is Australia, where consumers have been flocking to installment payment apps throughout the pandemic to make more of their purchases. Spending on BNPL apps grew by 22 percent in the first week of May, compared to spending figures in February, according to one recent study. This increase corresponded with a decline in customers using other payment methods such as cash, with Australian ATM withdrawals falling 32 percent below typical levels for the week of April 20 through April 26, for example. Many consumers are eschewing cash and card payments as COVID-19 continues, thanks to recommendations by organizations like the World Health Organization (WHO), which has noted that bacteria may cling to paper bills and plastic cards.

India is also seeing more consumers searching for flexible payment methods outside of cash and cards, and retailer Amazon has created a payment product designed to help. The eCommerce marketplace has launched an instant credit application for consumers in India called Amazon Pay Later. The app will allow customers to make purchases and pay the merchants back in installments, which are interest-free for up to 12 months. It will work like a traditional credit product after that period is up, with customers also paying interest on those installment payments. Amazon Pay Later enables users in the country to make transactions with retailers as well as pay their utility bills, according to the company.

To learn more on these and other stories, visit the Tracker’s News & Trends.

Igloo Looks To BNPL For Payment Flexibility

Enabling seamless payment experiences is also important for retailers, but this is especially critical during the COVID-19 pandemic when financially-stressed customers are spending much less than normal. Consumers want the ability to complete their transactions easily, which means they want access to quick and convenient payment methods. Retailers must also be careful not to overwhelm customers with too many payment options at checkout, however, warned Brian Garofalow, vice president of marketing and eCommerce for cooler retailer Igloo in a recent interview with PYMNTS. In this month’s Feature Story, Garofalow explains why offering BNPL provides flexibility at the checkout without adding payments decision fatigue.

Read more in the Tracker.

Deep Dive: How Pandemic-Related Budget Worries Are Driving BNPL Products’ Popularity

The COVID-19 pandemic has had a significant effect on consumer spending, with many customers reducing how much they buy due to loss of income or furloughed jobs. Retailers are also dealing with less revenue, therefore, which makes creating payment experiences that feel flexible — but more importantly affordable — more critical than ever. Retailers must find ways to assure customers suffering from financial woes before they abandon their carts at checkout. This is leading many retailers to examine alternative payment methods that break expenses into smaller installments. To learn more about how BNPL can ease customer stress during the COVID-19 pandemic, visit the Tracker’s Deep Dive.

About The Tracker

The “Buy Now, Pay Later Tracker®,” a PYMNTS and Afterpay collaboration, brings you the latest news and research from the buy now, pay later and retail space. It features expert analysis regarding changing payment trends as well as insights from top insiders within the retail and fashion industries.