Back in June, PYMNTS Intelligence clarified the following facts: Buy now, pay later (BNPL) payment options are gaining attention and demand from a wide range of consumers across all tiers of household income, covering a wide range of purchases from small daily necessities to big-ticket purchases.
The general trend was highlighted by a recent survey and survey on Wednesday (February 14). blog post from Federal Reserve Bank of New York.
Almost universal appeal?
“[A]”Given varying levels of financial stability, it is rare for people to use BNPL just once,” the Fed said in a post. “In fact, approximately 72% of financially stable users and 89% of economically vulnerable users have purchased BNPL multiple times in the past 12 months.”
The Federal Reserve defines “economically vulnerable” consumers as those with credit scores below 620, and all other consumers as “economically stable.” Approximately 60% of economically vulnerable consumers take advantage of the installment option as many as five times a year. After doing a little digging, the Fed found that 23% of financially stable consumers use their BNPL with the same frequency.
PYMNTS Intelligence found that approximately one-third of consumers living paycheck-to-paycheck use BNPL frequently (regardless of whether they are having trouble paying their monthly bills) and that their annual income We found that at least 25% to 29% of households making less than $100,000 had used BNPL. I am using BNPL.
Pay over time for transactions large and small
“[M]”Vulnerable households tend to use the service to make frequent, relatively small-value purchases that they may otherwise have difficulty making,” the Fed said in a blog post, especially for the 62-year-old financial population. % reported for purchases below the $250 threshold. Approximately 44% of vulnerable households and financially stable consumers pay for everyday items such as groceries over time.
Late last year, PYMNTS Intelligence found that approximately 10% of all consumers (representing more than half of BNPL users) choose to pay for their groceries over time.
When it comes to big-ticket items, the Fed found that about 17% of financially stable BNPL users split their payments into multiple payments for goods and services that averaged between $1,750 and $2,000. PYMNTS Intelligence found that high-income earners are becoming the heaviest users of their BNPL plans, especially when they purchase items such as electronics and furniture for $2,000 or more.
When asked why respondents use BNPL, the Fed found that “economically vulnerable people are generally more likely to cite poor credit scores, while financially stable people are more likely to cite poor credit scores.” “They often say they want to avoid it.”
Again, PYMNTS Intelligence’s findings point to the appeal of avoiding traditional credit cards or even applying for one in the first place. He told PYMNTS that 19 percent of BNPL users use installment plans to avoid tough credit checks that can negatively impact their credit score. 27% pointed to the benefit of her BNPL’s “low or no interest rate” feature.
