The Black Friday to Cyber Monday shopping weekend saw a substantial surge in Buy Now, Pay Later transactions. Online orders using BNPL tend to be 10% to 20% larger than those using traditional payment methods.
12/13/2023 2:35 P.M.
2.5 minute read
The recent Black Friday through Cyber Monday shopping extravaganza has proven to be a game changer for Buy Now, Pay Later (BNPL) providers and digital payment companies, marking a record-breaking period for online spending, Payments Dive reports.
According to the latest e-commerce data from Adobe Analytics, November 2023 is expected to set a new record for BNPL payments, with a significant increase in installment loans contributing to $940 million in online spending on Cyber Monday alone—a remarkable 42.5% increase from the previous year.
From Nov. 1 to Cyber Monday (Nov. 27), BNPL facilitated $8.3 billion in online spending, showcasing its growing influence in the world of e-commerce. Leading the charge is Klarna, a Swedish BNPL giant, which reported a 29.5% increase in orders placed through its platform on Black Friday compared to the previous year. Other major players in the BNPL market, such as PayPal, Affirm and Afterpay, also experienced heightened activity during this shopping bonanza.
Vivek Pandya, the lead analyst at Adobe Digital Insights, revealed that BNPL use has grown 17% so far this holiday season. Predictions indicate that approximately $17 billion will be financed through BNPL during this season, a significant jump from $14.5 billion in 2022. Pandya also emphasized that BNPL serves as a key component driving e-commerce growth, alongside factors like mobile utilization and discounts.
Pandya noted that BNPL’s appeal lies not only in its flexibility but also in its ability to break down total payments into interest-free installments, contributing to larger order sizes. Orders using BNPL tend to be 10% to 20% larger than those using traditional payment methods.
“Some consumers leverage it because it’s an easy, flexible way to process a payment, but some are using it because they’re in a more strained financial position and are having to lean on it more,” Pandya said.
Additionally, researchers at the Federal Reserve Bank of New York observed earlier that consumers relying on BNPL often exhibit financial fragility.
BNPL experienced a significant surge during the COVID-19 pandemic’s e-commerce boom, and despite its continued growth, it still constitutes a relatively small share of total online spending throughout the year—just 7% to 10%, according to Adobe. Credit cards, for now, remain the dominant payment method online, but the rise of BNPL suggests a shifting landscape in consumer preferences.
Holiday shoppers drove a 7.8% increase in online spending from Thanksgiving to Cyber Monday this year, amounting to a staggering $38 billion, Adobe reports. Thanksgiving, Black Friday, the holiday weekend, and Cyber Monday individually saw increases of 5.5%, 7.5%, 7.7%, and 9.6%, respectively.
In addition to BNPL providers, other digital payment companies also reported robust activity during the holiday weekend. Stripe, for instance, processed approximately 300 million transactions totaling $18.6 billion in payment volume between Black Friday and Cyber Monday—marking its largest-ever four-day period. Similarly, Block, which collects data from Square sellers offering Afterpay’s BNPL services, reported a 14% increase in transactions, with Afterpay itself experiencing a 19% year-over-year growth in BNPL transactions.
Additional Content from ACA International
Installment Plans Expected to Take Over the 2023 Holiday Season
From Collector: Instant Gratification
Remember, subscribe to ACA Daily and Member Alerts under your My ACA profile when logged in to acainternational.org to receive updates on the ACA Huddle.