The Power of Buy Now Pay Later

Buy Now Pay Later (or, “BNPL”) programs have surged in popularity over recent years and have become an attractive alternative purchase financing option among Millennials and Gen Z.

In recent Ipsos surveys, 27% of consumers share that they have used BNPL. Additionally, younger users are more likely than older users to continue carrying balances on these programs (48% of 18–34 year-olds, 27% of 35-54 year-olds, and 28% of 55+ year-olds). Consumers love these mini-credit lines to power their purchases. Merchants in kind, embrace the increased sales, average order values and reduced purchase abandonment rates.

The use cases for them, the psychological underpinnings of their appeal, and the overall perception of this new category of loans make them a powerful competitor at the point of sale. In my latest article found on Forbes, I discuss the unique aspects of BNPL that seem to have truly struck a chord with users:

• Their immediacy: Loan decisions and repayment options are presented at the point of sale shortly after initiating a BNPL plan request. Additionally, and unlike layaway (but similar to credit cards), a customer takes ownership of the products immediately upon purchase. The nearly instant gratification of product acquisition and a financing decision very much aligns with consumer expectations of today’s shopping environment.
• Their certainty: The program once approved, covers the price of the transaction completely. Payment options by amount and time period, are clearly presented to the customer for selection without any confusion or hidden details. As payments are extended over a period of time longer than a traditional credit card billing cycle, customers are able to manage their cash flow better while avoiding any interest or fee penalties. Finally, when payments have all been made, the line of credit is closed, generating a strong satisfying psychological sense of completion and accomplishment.
• Their accessibility: As most customers are able to qualify for BNPL programs, these loans extend purchasing power to a population segment who may not ordinarily be approved for a traditional credit card. Additionally, BNPL programs are starting to become available beyond just retail merchants, such as at travel sites and other services.

Read Kevin’s full article in forbes.com here!