Buy Now, Pay Later Programs & the Covid-19 Pandemic
Buy now, pay later services are becoming more prevalent in today’s new normal.
As e-commerce continues to grow, the economic fallout of the Covid-19 pandemic could lead more shoppers to try these payment options.
For the sake of this post, I will be abbreviating Buy Now, Pay Later as BNPL.
Many BNPL options have recently spring up. Some of them include Affirm, QuadPay, Klarna, Sezzle and Afterpay. These BNPL options allow consumers to make purchases and then pay in interest-free installments. The terms are typically over a few weeks or months.
PayPal recently announced a new BNPL option called Pay in 4. This enables customers to pay for their purchase in four interest-free installments. Doug Bland, senior vice president of global credit at PayPal, told Fortune the pandemic has accelerated the challenges retailers face. This is especially true as the holiday season approaches.
BNPL is different than layaway. With BNPL, a consumer does not have to wait to take their purchase home until it’s all paid. Instead, shoppers can get the item now and pay for it over time.
According to The Ascent:
- Over a third of U.S. consumers have used a BNPL service.
- Bill Me Later / PayPal Credit is the most commonly used BNPL service among respondents.
- Those aged 35 to 44 are most likely to have used a BNPL service, while those over the age of 54 are least likely to have used one.
- Most people use BNPL services to avoid paying credit card interest or buy something not in their budget.
- Electronics are most common type of item to buy with BNPL. (44%)
- Furniture & appliances account for 33% of BNPL purchases
- Only 22.13% of people say they understand all of the terms and conditions of BNPL.
- Most people who don’t use BNPL say they can pay with cash or a debit card instead.
Many companies in the home industry offer their customers credit terms. Some customers do not qualify. Buy Now, Pay Later, using these popular options, may be a new option that businesses in the home sector can use as a selling feature.