By Competiscan Insights Team
In the past year consumers have flocked to Buy Now, Pay Later financing, a type of payment plan offered during checkout that allows consumers to break their payments up into smaller installments, available through companies like Affirm, Afterpay, PayPal, and others.
As adoption of this new payment method has soared, Competiscan has noted a 530% increase in email marketing campaigns in the past year.
In Q2 2021 Competiscan conducted primary research on the rapidly evolving Buy Now, Pay Later (BNPL) space. To perform this analysis, Competiscan surveyed panelists who have used a BNPL service during the past year, as well as panelists who have not.
How do consumers feel about Buy Now, Pay Later?
For consumers who have already used BNPL for financing, convenience, and the perception that BNPL transactions offer a better ability to manage finances, were the top reasons selected regarding why they chose to make BNPL transactions. This indicates BNPL users view these services as a way to simplify their life by paying over time. Among these respondents, 84% said they were “satisfied” or “very satisfied” with their experience using BNPL financing.
Meanwhile, Competiscan found that even respondents who had not used BNPL financing were at least somewhat familiar with it. Over 80% indicated that they were at least a little bit familiar with this type of payment option. The survey also found that increased awareness may lead to increased adoption – as consumers who indicated that they were “very” or “somewhat familiar” with these services were more likely to indicate that they would consider using BNPL in the future.
How do Buy Now, Pay Later companies attract new business?
Consumers will often receive a nudge to use BNPL financing during the checkout process, but marketing campaigns for this service are also observed frequently within email and social media marketing. Consumers will often view a promotion for BNPL within retail email marketing. In fact, Competiscan found that 28% of retail email volume in Q1 2021 featured a BNPL mention. Occasionally BNPL marketing features a promotion, including limited-time discount offers, often targeted at repeat users. BNPL companies are also using refer-a-friend promotions, a common acquisition tactic to help spread brand awareness by leaning on their customer base to expand to new users.
Will Buy Now, Pay Later replace more traditional financing methods like credit cards and debit cards?
Credit card and debit payments still far surpass BNPL as payment methods, and it is unlikely that these financing methods will be unseated soon. However, the sudden momentum that BNPL has gained is enough to make financial institutions develop strategies and position their products and services against these alternative point of sale options. Multiple credit card issuers are taking steps aimed at limiting the impact of BNPL on their businesses. Competiscan has observed an influx of marketing from issuers like Chase, Citibank, and American Express offering the ability to split up purchases or pay over time.
What is next for installment lending?
Activity within the BNPL category has been concentrated to the retail sector so far, but Competiscan anticipates this financing method will spread to other industries. Travel is the next likely adopter, with companies like VRBO, Air Canada and Priceline announcing BNPL partnerships. B2B, healthcare, home improvement, utilities, and telecom are other potential areas for expansion.
It is apparent that BNPL is having an impact on how the next generation of consumers will choose to make purchases and manage their finances.
For more information on Buy Now, Pay Later, join the Competiscan Insights team for a live discussion on June 22, 2021, at 1pm CT. Click here to register
For more information on Competiscan data and insights, please email us at research@competiscan.com