Consumers expect to use BNPL more this holiday season, survey says
With the holiday shopping season in high gear, many retailers are offering Buy Now, Pay Later options and many consumers plan to take them up on it, according to a survey by Cardify.
Almost half (45.1%) of 2,000 BNPL users say they'll be paying for part, or all, of this year's holiday purchases using BNPL, putting it in third place behind debit cards (65.7%) and credit cards (54.6%). Only 31.5% of those surveyed said they'll pay with cash or check.
Of those who used BNPL for holiday shopping last year, 51.1% plan to use BNPL for more of their shopping this holiday season. Some 38.9% plan to use it the same amount and only 10.1% plan to use it less.
They're also likely to spend more this holiday season than shoppers who don't plan to use BNPL. 26.2% of the BNPL shoppers plan to spend more this year vs. 21.3% of those who don't plan to use BNPL.
Whether they can afford to pay more for this year's purchases is another question. When asked what they would do if BNPL wasn't an option, 45.8% said they'd have to spend less.
Of all the respondents, 10.8% said they had defaulted on a BNPL in the past; among those planning to use BNPL this year, that number rises to 13.9%.
Publicly traded stocks to keep an eye on in the BNPL space are $Affirm Holdings(AFRM.US$, $Afterpay Ltd.(AFTPF.US$, which agreed to be bought by $Block(SQ.US$, and $PayPal(PYPL.US$. $Visa(V.US$ and $MasterCard(MA.US$ are also setting up their own BNPL services.
A Credit Karma/Reuters study in September found that a third of U.S. consumers using BNPL had fallen behind on one or more payments.
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Teslaconomics : For consumers, Surprise BNPL is a portable, convenient and safe tool.
want money : Subprime 2.0, BNPL will not end well.
T_shares want money: I could be wrong about this, but, I don’t think that most BNPL providers even run a credit check. There will be winners and losers, but, I agree with you. In many cases, this will not end well at all.
got the heart : Shoppers defaulting on BNPL will eventually turn to credit cards for a bailout.
Bull Bull 1 : BNPL purchases are just an updated version of the old layaway plans. These will be small GDV purchases that will have poor credit quality. Losses incurred will be borne by the issuers, not MA or V. To the extent BNPL increases GDV of spend, that will be good for V and MA, but upside will be modest.
Lloyd Ghiorso Bull Bull 1: With the old layaway plans you did not receive the product until it was paid in full.
Squid Guy : As long I know, the credit part is managed by the banks, not V and MA. Also, BNPL still uses the cards so V and MA would still get the fees on the transactions from my understanding. May anyone correct me if I am wrong please ?
Myrrh Squid Guy: I'm still trying to wrap my head around it as well. I've read that some will use BNPL via debit card. V has a large segment of that market.
I think largely the poor performance of V and MA is due to concerns to their rates of growth going forward not so much that they will be largely displaced. I'm adding at this time for long term hold. The growth numbers for V 2 years out are still quite strong and they have a history of outperforming expectations. Plus about 2% share buybacks per year.
Regret oneself : Bullish on AFTPY a much better version of buy now pay later than AFRM.
Market Insight : I’ve been using BNPL over the past year. Affirm is the only one that charges my checking account, all the others charge a credit card. Assuming BNPLs pay a similar swipe fee to the credit card issuer as the merchant would, they should ultimately be a tailwind for card issuers and V/MA.
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