43% of Consumers Choose Retailers Based on Preferred Financing Options

During the holiday season, consumer spending is impacted by the availability and visibility of financing options, such as Buy Now, Pay Later (BNPL) plans.

A PYMNTS Intelligence Report, Maximizing Holiday Value: The Strategic Value of Early Pay Later Visibility, in collaboration with Splitit, shows how merchants who present these options early in the shopping process can increase their chances of driving larger purchases and attracting more customers.

Early Visibility Boosts Consumer Spending

The timing of when consumers are introduced to financing options plays a critical role in shaping their purchasing decisions. According to the report, 76% of consumers choose to use BNPL options before making a purchase, emphasizing the importance of presenting these options upfront. Specifically, 27.1% of consumers said they would be more likely to purchase higher-priced items if pay later options were available early in the shopping process. Additionally, 26.9% of shoppers reported they would buy more items, while 26.7% would be willing to pay full price instead of waiting for a sale, simply because the financing option was offered upfront.

This data highlights how early visibility of payment plans boosts consumer confidence, encouraging shoppers to make larger purchases. By providing financing details at the start of their shopping journey, merchants can stimulate bigger basket sizes and higher-value transactions, particularly in categories where consumers may hesitate to spend without clear payment options.

Loyalty Drives Growth in Pay Later Usage

Merchants can also leverage early financing visibility to capitalize on customer loyalty, which plays a significant role in increasing pay later usage. Among users of general-purpose credit card-linked installment plans, 35% reported using these plans more frequently over the past year. This trend suggests that merchants who make financing options available early can enhance repeat purchases and deepen engagement with their loyal customers.

It’s important to note consumer demographics like parents, younger generations, and higher-income earners are the primary drivers of this trend. These groups, who already exhibit high engagement with installment plans, can further boost their use when they are made aware of financing options early in their shopping process. For merchants, this represents an opportunity to create a more consistent revenue stream by nurturing repeat use among existing customers.

Pay Later Options Influence Merchant Choice

The availability of pay later options plays an important role in where consumers decide to shop. According to the report, 43% of consumers say that whether their preferred financing option is available strongly influences their choice of retailer. This effect is pronounced among millennials and parents, who are more likely to seek out merchants offering flexible financing plans. Notably, 53% of holiday shoppers cited the ability to manage their expenses as a key reason for considering pay later plans, underscoring the importance of these options during the holiday season.

Merchants who offer these options early in the process can tap into this demand, attracting a larger and more diverse customer base. Whether shoppers are purchasing gifts, luxury items or travel, offering flexible payment options enhances the likelihood of consumer loyalty and drives repeat business. For retailers, making pay later plans available early not only positions them as a convenient option for budget-conscious shoppers, but also helps secure customer choice, especially when competing for their business during the high-traffic holiday shopping period.