9 Important Buy Now Pay Later Statistics for 2022
MONEY - SHOPPING - STATISTICS
Published On: January 03, 2022
Buy Now, Pay Later (BNPL) is a mode of payment that has become extremely popular in the recent past. It’s said to be an alternative to credit cards but with a little-to-no interest involved. BNPL allows customers to buy things and pay for them in a series of installments.
Sometimes these transactions include a little fee but in many cases, the retail price is simply divided into four payments. Services like Affirm, Klarna, and Klarna are allowing people to purchase items that they otherwise wouldn’t be able to afford.
The payment processing firm Worldpay estimated the total global eCommerce transactions to be $4.6 trillion in 2020. BNPL accounted for 2.1%(or $97 billion) of this total amount. In 2024, the figure is expected to double and reach 4.2%.
There are many other buys now pay later statistics that highlight the meteoric rise of this payment method. Here are nine of them that are simply fascinating to read.
1. One in Ten Customers in the UK used BNPL for Christmas Shopping
The biggest BNPL provider in the UK, Klarna saw its users increase to 15 million in 2021. This is more than the double amount of users they had at the start of 2020. So it’s not surprising that a recent survey
by Citizens Advice found that almost 10% of Christmas shoppers in the UK were planning to use this payment method.
The risk with using BNPL is that one can be enticed to spend more than originally intended. Citizens Advice has urged people to “not spend more than they can afford” with this service.
2. Buy Now, Pay Later is Now a $100 Billion Industry
The rise of BNPL was one of the biggest stories of 2021. Customers found themselves in an unfamiliar financial territory due to economic crises and they found this new method to be extremely useful. Klarna, the Swedish fintech company which has a major role in making BNPL popular is currently valued at $45.6 billion according to CNBC.
The whole industry is currently worth $100 billion
with some estimating it will reach up to $680,000 billion in 2025. Considering the extraordinary momentum of this service, there is no reason to doubt that the buy now pays later market size would increase this much.
3. 57% of Customers Prefer PayPal Credit When it Comes to BNPL
Some people consider BNPL synonymous with services like Afterpay, Affirm, and Klarna. But surprisingly, most people prefer PayPal Credit for this mode of payment.
According to a survey by Crresearch
, PayPal dominates the buy now pay later market with 57% preferring this service. Afterpay is the second most popular with 29% and Affirm in the third position with 28% of consumers favoring the provider. Klarna and ZipPay take the fourth and fifth position with 23% and 19%.
The consumer preference for PayPal could be simply a matter of convenience. Since PayPal is the most widely used payment solution, most people find it easy to use this service rather than exploring other options.
4. 73.2% of Buy Now Pay Later Users are Millenials or Gen Z
BNPL statistics by eMarketer
show 80% of users of this service were millennials or Gen Zers in 2018. This was the time when Affirm, AfterPay, and Klarna, and many BNPL companies in the USA and across the world were trying to establish themselves. Fast forward to 2021 and now, 73.2% of BNPL users belong to the younger age group.
Millennials are 40% of the users while Gen Zers make up 33.2%. Estimations show that by 2025, millennials will continue to have the biggest share in the BNPL user base. Later on, Gen Z might overtake them as they will become more financially independent.
5. BNPL Users in Age Group 18-24 Increased by 24% in 2021
It took a while for a big chunk of the younger generation to adapt to BNPL. In 2020, only 38% of respondents in ages 18 to 24 said they were using this mode of payment
. But in 2021, this number increased to 62%, representing an overall 24% growth in just one year. These stats indicate that BNPL’s popularity skyrocketed in the year 2021 and younger people rushed to the payment providers.
6. BNPL Consumers Over the Age of 55 Increased by 100% in 2021
Some might consider buying now, pay later as a hip new financial solution that only attracts Gen Z and Millenials. But the reality is much more complicated. In the United State, the age group over 55 saw a whopping 100% growth in BNPL usage in 2021. This shows that much older consumers are taking a liking to the option of splitting their bills in multiple installments.
One of the reasons older consumers have been able to adapt to this payment solution is because it’s extremely easy to use. Providers like PayPal, Affirm, and Klarna has made the process extremely simple and intuitive.
7. 34% of Buy Now Pay Later Consumers Fall Behind their Payments
The data on BNPL default rates are quite alarming. In a survey conducted by Credit Karma
, 34% of the respondents confirmed that they had fallen behind on one or more payments. While services like Affirm don’t charge a late fee, they do make it clear that missing out on payments could reduce your chances of getting a loan in the future.
The survey further revealed that 25% of millennials have missed one BNPL payment while 30% of Gen Z have missed two. These figures vindicate experts who have been trying to call attention to the misuse of buy now pay later.
8. BNPL Increases Conversion by 20% to 30%
According to the estimates by RBC Capitals, BNPL increases the conversion rate of retailers by 20% to 30%. This is the biggest reason retailers are jumping on the bandwagon. Having the option to spread out the payment increases the chances of customers buying certain items.
A study by Similarweb also confirmed this phenomenon. The website analyzed the top 100 U.S fashion and retail businesses with 50 merchants offering buy now, pay later, and 50 not including this option. Those with BNPL on average saw a conversion rate of 6% compared to 4% of those without the option.
9. 62% of BNPL Users Think it Can Replace their Credit Card
Some of the buys now pay later statistics to explain how massive of an impact this payment solution can have. A survey by Fool.com, 27.42% of customers are certain that BNPL has the potential of replacing their credit cards. 34.95% believe it could take the place of their credit cards in theory but they will keep using their credit cards regardless.
Combined, that’s almost 62% of consumers believe buy now pays later does the job of a credit card. One could argue that BNPL is a better alternative as it rarely involves interest and many of the providers don’t even charge a late fee.