Yet another survey on BNPL examines consumer usage of the financial product, highlighting its benefits and risks.
04/22/2024 2:30 P.M.
2 minute read
A new survey reports that the two reasons consumers use buy now, pay later (BNPL) services are to stretch their cash flow and to take advantage of low/no interest rates.
The Bankrate survey found that 39% of U.S. adults say they have used at least one BNPL service. The most widely used are PayPal Pay in 4/Pay Later (16%), Affirm (12%), Afterpay (12%) and Klarna (11%).
“The personal saving rate is way down, credit card debt is up and BNPL usage has been surging,” Bankrate senior industry analyst Ted Rossman said. “A lot of people are looking for credit to make ends meet. BNPL is readily accessible and sometimes feels more responsible than credit card debt.”
Market Growth
BNPL fintech Klarna, which recently announced that the company replaced many of its customer service agents with an AI chatbot, said it is launching a new U.S. credit card that will allow users to pay in installments.
“With the Klarna credit card, the company is now competing with the likes of Apple and more recently, Robinhood as well as rival BNPL player Affirm in offering a credit card in the United States,” TechCrunch reported.
David Fock, Klarna’s chief product and design officer, told TechCrunch that the company wants to offer “payment option flexibility but we don’t want it to be like a credit card that builds revolving credit for consumers. We see it as a problem that the credit card debt in the U.S. is hitting record levels, and we believe our options are healthier and more sustainable.”
In the UK, the percentage of Klarna accounts that were later handed over to collections was 0.84% last year, down from 1.95% two years prior, PYMNTS reported.
Collection Perspective
ACA member company TrueAccord works with a lot of BNPL consumers, ACA previously reported, and found that as the product becomes a more significant part of consumers’ overall debt obligations and payment priorities, “the percent of BNPL customers who make a payment is more than double the like-size credit card accounts at 30 days post placement and 50% higher at 90 days.”
On average, BNPL customers are “digitally savvy” and prioritize lower balance accounts first when repaying their debt, TrueAccord observed.
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