3 Lies and a Truth About Buy Now, Pay Later Payments

The explosive growth of buy now, pay later (BNPL) installments has payments and e-commerce professionals buzzing about payments as the fifth “P” of marketing. With consumer demand for BNPL expected to grow 192% by 2024, there are a few common misconceptions that persist about who is using BNPL and what they are using it for.

Lie #1: “BNPL is only used by millennials.” 

While many millennials tend to be early adopters and quickly jumped on the BNPL bandwagon for retail items, it’s not accurate to say that “only” millennials are using BNPL.

The truth is that BNPL is being used by consumers of all ages. According to a study from The Motley Fool, in March of 2021, 55.80% of Americans now saying they’ve used one of these services. That’s an increase of 48% in less than a year.  And the fastest growing generational cohort adopting BNPL services is actually those U.S. consumers over the age of 54. According to the same study from The Motley Fool, between July 2020 and March of 2021, the percentage of Americans over the age of 54 who used a BNPL service grew 98%.  

Lie #2 “BNPL is only for small transaction values.” 

BNPL isn’t just for handbags and shoes. Consumers are using BNPL for a wide variety of larger purchases from sporting equipment, to travel, to furniture. Merchants need a flexible BNPL solution that can accommodate small purchases of $50 dollars with 4 payments over 6 weeks all the way up to $25,000 with 24 payments over 2 years. For merchants, the truth is that it’s better to offer a complete range of flexible payment options to address the full spectrum of consumer needs. 

BNPL transaction size mix

Lie #3: “BNPL is only for impulse retail purchases.” 

It’s also not correct to assume that BNPL is only being used for impulse purchases on consumer goods like clothes, shoes, and handbags. BNPL is useful for all kinds of transactions and many meaningful, bigger-ticket items that will add long term value to people’s lives and that generally involve more consideration before purchasing. For example, the most popular items purchased using BNPL include electronics (46.6%) and furniture or appliances (38.89%). Leisure travel is also rising quickly in demand as destinations begin to open following the pandemic. 

Truth: “BNPL is so much more than a method of payment”

BNPL is not just a method of processing payments; it is a strategic marketing tool to help brands drive conversions through targeted and personalized offers. Through interest-free promotions, merchants can move higher margin products/services, target specific need periods, or move distressed inventory.  Offering consumers personalized, targeted offers that provide payment flexibility unique to their specific financial situation also improves customer loyalty and increases customer lifetime value.

BNPL helps put payments at the center of the consumer engagement process, driving incremental revenue and opening up new possibilities for marketing, customer acquisition, customer loyalty, and more. BNPL is a strategic, revenue-generating payments tool that brands can use to attract new buyers and widen the top of the funnel, as well as boosting the bottom line.