15 Need-To-Know Buy Now, Pay Later Statistics For Small Businesses
Curious about Buy Now, Pay Later and whether or not it will work for your business? Keep on reading to find out the facts you need to know!
Buy now, pay later statistics continue to demonstrate the popularity of BNPL, especially with younger shoppers. But what does buy now, pay later mean for businesses? Should you offer these financing solutions to your small business customers? Is BNPL just a trend?
The truth about buy now, pay later for merchants is clear when you look at buy now, pay later statistics: BNPL is both popular and profitable for businesses.
Keep reading to learn what statistics show about the buy now, pay later market and how your small business can benefit from BNPL.
Table of Contents
- What Is Buy Now, Pay Later For Merchants?
- Buy Now, Pay Later Market Trends
- What Percentage Of People Use BNPL?
- Who Uses Buy Now, Pay Later The Most?
- What Customers Frequently Buy With Buy Now, Pay Later
- Is Buy Now, Pay Later A Good Idea?
- Buy Now, Pay Later Statistics For Businesses: The Bottom Line
- FAQs On Buy Now, Pay Later For Businesses
What Is Buy Now, Pay Later For Merchants?
Buy now, pay later for merchants is a purchase financing plan you can offer customers. BNPL works similarly to a credit card: your business will get paid whether the customer makes their payments or not. BNPL services like Affirm and Klarna are popular and easy for both consumers and merchants.
Buy Now, Pay Later Market Trends
Buy now, pay later market trends show some clear patterns: these services are wildly in-demand, especially with young people and for larger purchases. Buy now, pay later statistics also show that BNPL has some clear benefits for small businesses.
➤ Buy now, pay later market is still growing post-lockdown
With cash-strapped customers turning to payment deferment methods in order to make purchases during the pandemic, the BNPL sector achieved record growth throughout 2020. But even as consumers’ personal finances have recovered from COVID and the economy has fully reopened, BNPL has remained popular and is expected to continue growing.
According to a market report from ResearchAndMarkets.com, the global buy now, pay later market is forecast to grow by $41.83 billion from 2022-2026, driven by the increasing popularity of online payments, increased demand for deferred payments, and increased spending on luxury goods.
➤ Missed BNPL payments are common
While BNPL services are growing in popularity, many customers who are eager to take out a BNPL loan nevertheless struggle to make payments on these loans. According to a Credit Karma survey on buy now, pay later, of those who have used BNPL, 34% of consumers have fallen behind on at least one payment.
The survey showed that younger consumers were more likely to miss payments than older generations and the majority of BNPL users who missed payments believed their credit score had suffered as a result.
➤ BNPL is expanding to non-retail markets
BNPL started as an online retail phenomenon. But these days, more types of businesses are seeing the potential benefits of BNPL–healthcare is one such industry that’s exploring the ability for patients to spread out payments over time, without incurring interest. Some up-and-coming fintech startups offering BNPL for healthcare include Nibble Health, Alchemy, and Walnut.
Even hospitality businesses such as restaurants are also incorporating BNPL. In fact, even fast food companies are starting to accept BNPL. For example, Chipotle now lets you pay for your meal over time using the BNPL service Zip. As reported by Fox Business, Zip is also now available at some Chevron gas stations.
What Percentage Of People Use BNPL?
A growing portion of the population is using BNPL to make purchases. However, the exact numbers vary depending on who you ask, and this figure will of course change over time. Here are a couple of different stats collected by different surveys.
- According to the above-mentioned Credit Karma survey from Sept. 2021, 44% of respondents had used BNPL.
- A 2022 Lending Tree BNPL survey found that 43% of people had used BNPL—up from 31% in 2021.
It’s difficult to say exactly what percentage of people use BNPL, but when you average different statistics from different studies, it seems that at least one-in-three people have tried BNPL. And this percentage will certainly grow over time.
Who Uses Buy Now, Pay Later The Most?
Younger shoppers use BNPL the most, but BNPL is increasingly being adopted by older generations as well.
Younger Consumers Are Keen On BNPL Services
➤ Nearly 75% of BNPL users are Gen Z or Millennials
Millennials will continue to comprise the largest user base for BNPL through 2025, but Gen Z (14+) is slowly catching up as they age into digital shopping. By the end of 2022, 44.1% of Gen Z will have used BNPL at least once a year. (These findings are from a 2021 BNPL study by eMarketer.)
BNPL Is All-Around Popular
➤ More than one in three people have used BNPL
According to the above-mentioned 2022 Lending Tree study, roughly 43% of consumers have used BNPL.
And while Gen Z and Millennials make up the largest share of BNPL users, the fastest growth is coming from older generations. Lending Tree found that while only 9% of Baby Boomers used BNPL in 2021, that figure shot up to 22% in 2022.
What Customers Frequently Buy With Buy Now, Pay Later
Customers mostly buy large-ticket items with BNPL, though younger shoppers are more likely to use it on smaller purchases (like, say, a Chipotle takeout order). Most shoppers who use BNPL instead of credit cards do so in order to avoid credit card interest and debt.
Big Purchases Are Trending With BNPL
➤ 35% of BNPL buyers use it for purchases $500 or larger
Meanwhile, 32% have used BNPL to finance purchases of $100 or less. (These stats come from the Credit Karma survey linked above.) The survey found that overall, younger generations were more likely to finance small purchases under $100 with BNPL, while Gen X and Baby Boomers were more likely to use BNPL for larger purchases.
➤ BNPL is frequently used on big-ticket items
The 2021 eMarketer research mentioned previously found that the top items respondents purchased with BNPL included big-ticket items like electronics, furniture, and appliances, as well as fashion and digital entertainment purchases. The eMarketer report predicts BNPL purchase trends will soon start to move more into big-ticket services, such as travel and healthcare.
Consumers Choose BNPL To Avoid Credit Card Interest
➤37% of consumers use BNPL to avoid credit card interest
With credit card issuers charging exorbitant interest rates on card balances, it’s not surprising that people are looking at different options when they need to spread purchases over multiple months. Meanwhile, many BNPL services feature no interest.
According to a July 2022 Bankrate report about buy now, pay later statistics, roughly 37% of BNPL users said they used the service to primarily avoid credit card interest. This reasoning for using BNPL was only second to the 45% of respondents who said they used BNPL because they wanted to buy something outside of their budget.
➤80% use buy now, pay later to avoid credit card debt in general
Many of today’s savvy consumers want to avoid any credit card debt. Interest is definitely a component of credit card debt, but BNPL also helps you avoid incurring debt by breaking down your payments into four easy-to-pay installments. According to an April 2022 report from Experian, a whopping 80% of US survey respondents said they used BNPL to avoid credit card debt.
Is Buy Now, Pay Later A Good Idea?
An April 2022 Callsign consumer research study on BNPL fraud found that one in eight BNPL users have been the victim of buy now, pay later fraud. The most common type of BNPL fraud users experience is a fake BNPL account being set up with their credentials. Some other types of BNPL fraud include signing up for a fake BNPL service and BNPL accounts being hacked.
Apart from fraud, there are additional risks of using BNPL, including a tarnished credit score for users who don’t make all their installments. BNPL services commonly report missed payments to credit bureaus like TransUnion and Equifax, which will use your BNPL payment history to calculate your credit score.
There are also BNPL risks for merchants—fraudulent chargebacks on BNPL purchases, for example. The Calsign study also found that of BNPL users who were the victims of fraud, 23% no longer trust the retailer with which they used the BNPL loan. To learn more about how BNPL fraud affects merchants and what you can do to protect your small business and your customers, read our article on BNPL for businesses.
BNPL Is Convenient For Customers
Despite its risks, BNPL remains popular with consumers, thanks largely to its convenience. BNPL is quicker and easier to qualify for compared to a credit card, and even very young consumers without solid credit history or even a bank account can qualify (depending on the BNPL service). BNPL also offers a simplified repayment plan compared to credit cards.
➤ 45% of BNPL users find BNPL more convenient than credit cards
Specifically, 45% of BNPL users find BNPL more convenient than credit cards because BNPL makes repayments easier (according to Bankrate).
➤ 43% of BNPL users find BNPL more flexible than other payment forms
BNPL customers also find buy now, pay later more convenient than traditional payment methods in terms of flexibility (also according to Bankrate). For example, BNPL services usually give customers a range of payment choices (credit card, bank account, Apple Pay, etc.), whereas you will have to pay your credit card bill with your bank account.
BNPL Services Create Repeat Customers
Any business needs repeat customers. Customers who come back mean a more consistent revenue, and confirm that you offer products or services customers trust. BNPL services certainly cater to their own repeat customers and by implementing a BNPL option at checkout, your business will be able to draw from customers who are already comfortable using that service.
➤ Up to 90% of BNPL service users are repeat customers
Block-owned BNPL service Afterpay has claimed, in a Brainstation Magazine article on the success of Afterpay, that some 90% of Afterpay are repeat customers—that is, individuals who have used Afterpay in the past, either with the same retailer or a different retailer that also offers Afterpay. This would indicate that customers are forming loyalty to particular BNPL brands (like Afterpay, PayPal Pay-In-4, etc.).
Buy Now, Pay Later Statistics For Businesses: The Bottom Line
BNPL is a side of the commerce space that’s still growing at a rapid clip, as you can see if you pay attention to buy now, pay later statistics. The buy now, pay later market started as an eCommerce trend, but is now rapidly expanding to brick-and-mortar stores and to businesses outside of traditional retail, from gas stations, to healthcare, to fast food.
For most small businesses, there’s little downside to offering a BNPL option at checkout. Besides giving your customers more payment options, you may also be able to increase your revenue—something that is all-important in today’s economy. If you’re interested in offering a BNPL option at checkout, be sure to read our article on the best BNPL apps.