Buy Now Pay Later Trends
In the current scenario, the buy now, pay later option is on the rise as compared to earlier times of the 2000s. When there is an economic downturn with high interest rates and high inflation, BNPL can be a better option for repaying off credit purchases.
In the US, a report from CFPB in September 2022, mentioned that from 2019 to 2021, BNPL users grew from 16.8 million to 180 million offered by the five lenders in the US alone. Earlier BNPL was used for apparel and beauty products, but currently, there is a shift towards pet care, groceries, gas, and travel. The average range of BNPL is $50 to $1,000.
Companies such as Affirm, and Klarna offer BNPL loans to use in participating retail stores. Chase and American Express issue credit cards that have BNPL options. In 2023, One, a majority owned by Walmart has planned for similar financing services.
Additionally, in March 2023, CFPB reported that BNPL service users were having bank overdrafts, payday loans, pawn loans, and other high-interest financial products, highlighting that the users are financially more vulnerable than the non-users of BNPL facilities.
The CFPB also found that Black, Hispanic, and female consumers on average used this service more among all the users and most of the users belong to household incomes ranging from $20,000 to $50,000.