SAN FRANCISCO–A new study suggests the “explosive” growth of buy now pay later solutions (BNPL) will only continue to surge.
In July 2020, The Ascent, a unit of the Motley Fool, surveyed 2,000 Americans about their buy now, pay later habits. The company then followed that survey with another in March 2021, with the results showing an almost 50% growth in BNPL in less than a year.
The Key Findings
Among the key findings:
- 55.8% of consumers have used a buy now, pay later service, up from 37.65% in July of 2020 -- an increase of almost 50% in less than one year.
- Buy now, pay later usage growth was largest in the 18 to 24 (62% growth) and 55+ (98% growth) age groups between July 2020 and March 2021.
- 53% of respondents who have never used BNPL say they're at least somewhat likely to use it within the next year.
- Among buy now, pay later users who have used the service more since the pandemic started, 41% say they've done so to conserve cash in case of an emergency, while 25% say it's because they lost income.
- 31% of buy now, pay later users have made a late payment or incurred a late fee. 36% of BNPL users say they are at least somewhat likely to make a late payment within the next year.
- 62% of buy now, pay later users think BNPL could replace their credit cards, though only about a quarter want that to happen.
- PayPal's buy now, pay later services are the most commonly used among providers, with 43% of users saying they've used the brand's BNPL options.
The survey further found:
- The most common reason to use buy now, pay later services is to make purchases that don't fit in one's budget -- 45% of respondents have used it for this reason.
- Buying electronics is the most common use of buy now, pay later, with 48% of users saying they've used it for that reason.
- 36% of buy now, pay later users use BNPL once a month or more.
- Buy now, pay later users aged 18 to 24 are the most likely to pay $250 or more per month when they have a BNPL payment.
- Americans understand BNPL significantly better than they did last year, with a nearly 50% increase in the number of people who say they understand it at least somewhat well.
- 61% of buy now, pay later users would rather use a BNPL service offered directly from the retailer they're buying from than going through a third party.
Age Breakdowns
Here's how BNPL usage breaks down by age:
INSERT CHART HERE
In July 2020, only 37.71% of consumers aged 18 to 24 had used a buy now, pay later service, but that figure jumped to 61.16% in 2021, showing 62% growth in less than a year.
Users aged 25–54 saw growth of over 20% in the same period. Respondents aged 55 and up showed a staggering 98% growth, but still see significantly less use of BNPL services than other age groups, with only 41% of these consumers reporting having used one, according to The Ascent.
The findings align with other research that shows that younger consumers are looking for flexible yet responsible ways to pay for purchases, the company said, noting men are also more likely than females to use a BNPL service, with 62.20% of male consumers taking advantage of this payment option compared to 51.36% of women.
The full study can be found here.