Digital Article Repository: Buy Now, Pay Later

NASCUS Report Article Repository: Buy Now, Pay Later


“More than 30 Buy Now, Pay Later Trends & Statistics for Banks in 2022”
Courtesy of Garret Reich, The Financial Brand

BNPL Growth Projections

The number of U.S. buy now, pay later users is projected to soar from 1.6 million in 2018 to 59.3 million in 2022, driven by innovations in credit access and purchase flexibility. Growth will likely taper through 2025, however, as BNPL enters a post-regulation maturity phase.1

  • BNPL offerings will account for an impressive $680 billion in transaction volume worldwide in 2025.2
  • Buy now, pay later usage is expected to increase by 20.7% between 2021 and 2028.3
  • U.S. BNPL transaction volume is projected to surpass the $100 billion mark annually by 2024, up from $55 billion in 2021.4
  • BNPL payments are expected to account for nearly a quarter of all global ecommerce transactions by 2026, up from just 9% in 2021.5

Why Customers Buy with BNPL

The most common reason to use buy now, pay later services is to make purchases that don’t fit in one’s budget — 45% of respondents have used it for this reason.6

Why customers use BNPL versus credit cards

  • Buying electronics is the most common use of buy now, pay later, with nearly half (48%) of BNPL users saying they’ve used it for that reason.6
  • 71% of Americans who visit the dentist frequently would use BNPL over traditional payment methods.7
  • 86% of pet owners would choose BNPL in place of traditional payment methods to help pay for future vet costs.7

How Often People Turn to BNPL

  • Nearly three out of five buy now, pay later users (56%) prefer BNPL to credit cards.8
  • 38% of users say buy now, pay later will eventually replace their credit cards.6
  • Two in three Americans are more interested in BNPL in 2022 than before the pandemic.7
  • Of consumers who use BNPL services, nearly three out of ten people (29%) use it at least once a month. 51% of people use buy now, pay later services once every three to six months.8

How often people use BNPL services when shopping online

  • Of people who use BNPL, over two thirds (67%) use BNPL when shopping online at least half the time.8
  • 53% of respondents who have never used buy now, pay later say they’re at least somewhat likely to use it within the next

A Deeper Look Into the Consumers Using BNPL

  • The average amount of the last item BNPL users purchased was $689.8

People don’t open buy now, pay later contracts one at a time. Any one BNPL user is paying for an average of four items (3.8) at any given time.8

How much consumers spend each month on BNPL payments

  • 61% of buy now, pay later users would rather use a BNPL service offered directly from the retailer they’re buying from than go through a third party.6
  • People whose buy now, pay later behavior was included in credit scoring models saw an average credit score improvement of 13 points. People with credit records of two years or less saw a greater increase, on average 21 points.11


Demographics of BNPL Customers

More than 45 million people age 14 and older in the U.S. were expected to use buy now, pay later services by the end of 2021.12

Usage of buy now, pay later providers, by generation

  • 44% of Gen Z is predicted to use BNPL at least once in 2022. That compares to 37% of Millennials, 23% of Gen Z and 9.4% of Baby Boomers.12
  • By 2025, it nearly 30% of BNPL users will comprise Gen X and Baby Boomers.12
  • 10% of Gen Z say they would use buy now, pay later for a $500 purchase.13
  • Buy now, pay later users age 18 to 24 are the most likely to pay $250 or more per month when they have a BNPL payment.6

Sources:1 eMarketer, 2 Insider Intelligence, 3 EY, 4 Mercator, 5 Juniper Research, 6 Ascent, 7 OPY, 8 C+R, 9Woolard Review, 10 Nerdwallet, 11 Equifax, 12 eMarketer, 13 Alliance Data Systems

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April 29, 2022

What Might Responsible BNPL Look Like?

Courtesy of Tim Flacke,

BNPL is reaching an inflection point. Continued strong growth is spurring action by larger providers, such as Amex, Capital One and Citizens – firms with incentives to think holistically and long-term about their customers’ financial well-being, and their corporate reputations. Federal and state regulators are also focusing more on BNPL. It’s time to consider what “responsible BNPL” might look like, and what outcomes it can help deliver for low and moderate-income (LMI), underserved customers.

Among consumer advocates and some regulators, the rapid growth of Buy Now Pay Later (BNPL) has been met with deep suspicion and concern. This is unsurprising: BNPL is marketed to merchants as a way to increase spending, yet is serving more at-risk populations and with little regulatory oversight. BNPL has also taken root rapidly, growing 85% in 15 months during 2020 and 2021 and attracting a record $4B of venture funding in 2021,

BNPL deserves special focus, as it is serving younger, more racially diverse households with lower and more volatile incomes (compared to credit cards). Amidst historical and current systemic discrimination, these same households are less likely to have a credit card, yet more likely to face financial challenges that make access to credit critical. For many, BNPL may be the only practical credit option.

It’s also clear consumers have embraced BNPL; over 55% of Americans have tried it. And BNPL has some desirable attributes: loans are clear, time limited, convenient, don’t create long-term debt balances by themselves, and can be no-cost. BNPL is also extending credit to those with few or no other credit options.

These facts suggest an opportunity for BNPL to contribute to financial inclusion and security.  Here are four key questions to consider for financial service providers looking to chart a long-term, responsible BNPL strategy built on a commitment to LMI customers’ financial well-being.

How do your LMI customers experience BNPL?

While we speak of BNPL as if it is a single product, in fact offerings vary considerably from provider to provider in terms of costs, fees, underwriting practices and other issues. The practical result is caveat emptor (“buyer beware”)and a greater chance that customers will end up using products they don’t fully understand as they make quick decisions at point of sale. Because BNPL is rarely underwritten using traditional credit bureaus, few providers understand a consumer’s full debt picture; this places users at greater risk of biting off more debt than they can chew.

Responsible BNPL providers have an opportunity to make terms and conditions completely clear and easily understood, not only at the point of sale, but by communicating with customers before and after purchases. Firms should engage their customers to understand how they use BNPL and what types of support they would welcome; for instance, might they value a simple tool to help take stock of how many installment loans one has outstanding – with what amounts, due dates, and outstanding balances – before adding another?

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