Many American consumers are feeling financial hardship as the holiday shopping season progresses and will look to flexible spending plans to put them at ease. More merchants are adopting buy now, pay later (BNPL) options to allow consumers to pay in four interest-free installments. This will not only help retail items become more accessible to more consumers, but could help marketers bounce back from what may have been a tough year in terms of sales due to the pandemic.
Recent research by PYMNTS and Afterpay has found that millennials are especially excited about these flexible payment options and prefer them more than any other generation. In fact, only 20.7% of millennials report being financially stable, compared to 79% of non-millennial consumers. BNPL could be particularly useful in helping this population to buy gifts and expand their purchasing power.
The last Buy now, pay later Tracker® examines how installment payment plans can help budget-conscious consumers, as well as merchants, see sales rebound this holiday season.
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PYMNTS researchers recently discovered that many shoppers would avoid merchants who don’t offer their preferred payment methods, and that this determines where consumers will shop. The to study revealed that merchants who offer flexible payment plans could tap into a loyal and large pool of digital consumers. Forty-eight percent of those who prefer the method said they wouldn’t buy from retailers that don’t offer it, compared to 40 percent of those who use mobile wallets and 37 percent of those who use mobile wallets. contactless cards that said the same thing.
Emerging payment solutions such as BNPL are increasingly intriguing young consumers as they seek to avoid the high interest rates and debt problems that can accompany credit cards. A recent analysis have found that interest-free installment plans appeal to these consumers, in part because they provide the financial flexibility to purchase more expensive purchases without taking on traditional credit risks. Almost 20% of buyers between the ages of 22 and 30 don’t have a strong enough credit history to grant them credit card approval, for example.
There is additional evidence that BNPL methods are emerging as a viable alternative to credit cards for many cash-strapped consumers this holiday season. A investigation found that 39% of BNPL users take advantage of the services to avoid incurring credit card debt, while 38% use them to purchase items outside of their budget and 25% aim to avoid credit checks.
For more articles on these and other BNPL titles, read the Tracker News and Trends.
Unbound Merino Takes Advantage of Installment Payment Plans for More Accessible Purchases
Daniel Demsky, co-founder of all-merino wool travel clothing retailer Unbound merino, is betting that offering BNPL payment solutions to its customers will be the key to increased sales. To help make the retailer’s average basket total of $ 170 more palatable to consumers, the company is offering installment payment options at checkout to help expand their population and make their luxury wool products more accessible to more than 10 million people. consumers. In this month’s article, Demsky details the company’s hopes to increase conversions over the holidays and help bounce sales back into the new normal.
To get the full story, download the Tracker.
The use of installment payment plans has exploded in recent years. Consumers around the world are believed to be expected spend $ 680 billion through such solutions by 2025, a 92% increase from the $ 353 billion spent last year. BNPL options are particularly appealing among Millennials, and 27.3% of millennials use installment payment plans to make purchases, according to PYMNTS research. This month’s Deep Dive explores consumer trends towards installment payments and why merchants are embracing it as a way to increase sales in these tough times.
Read the full Deep Dive in the Tracker.
About the tracker
The Buy now, pay later Tracker®, a PYMNTS and After payment collaboration, brings you the latest news and research from BNPL and the retail space. It features expert analysis on changing payment trends as well as insights from top insiders in the retail and fashion industries.