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The Latest ‘Buy Now Pay Later’ Consumer Insights for Your Business

Buy Now Pay Later (BNPL) is now the fastest growing online payment method in the UK, with over 5 million customers, according to Statista. Its growth rate is several times higher than that of bank transfers and triple that of digital wallets.

We’ve previously covered how you can use BNPL to boost your business and the basics of starting to accept this payment method. But as the trend is exponentially growing, we believe that once you integrate BNPL into your payment gateway, it’s equally important to keep your finger on the pulse of consumers’ reactions.

So how are consumers reacting to this new payment trend, and what can we learn from their shopping behaviour?

Consumer behaviour is changing
It’s important to acknowledge that following the introduction and adoption of certain payment products, over time, consumer behaviour changes. This is accomplished either by introducing completely new behaviours or building on existing ones. Cash on Delivery, Paytm Wallet, and now BNPL are good recent past examples of behaviour changing products and services.

The most avid fans of BNPL payments are consumers in the newer generations: millennials and Gen Z. And it’s clear why: these types of consumers have little credit history and big ambitions. Therefore traditional payment methods like credit cards or loans do not appeal to them. They need a quick, frictionless process that does not require a lot of admin. While it used to take months and even years to establish financial credibility using traditional methods, today, all of that is possible with real-time data.

The possibility of delaying payment for goods for younger cash-strapped consumers for 3 months is another incentive to opt for BNPL. And suppliers of these services are omnipresent on all touchpoints where these customers are present: heavily advertising on social media or during checkouts of retailers that appeal to these demographics, like Asos, H&M, Boohoo or JD Sports.

However, BNPL providers now also want to appeal to the other generations and are partnering with more upscale retailers for investment purchases like high-end mattresses and expensive electronics.


The main reasons consumers use BNPL

Convenience and trust

Convenience and trust are essential factors that are driving BNPL adoption as consumers make purchases online. Despite using a novel payment method, consumers still want purchases to be made quickly and securely without being overburdened with the legal aspects. These factors may explain their interest in BNPL services being integrated into digital wallets, which are already preferred by many consumers due to their convenience and security.


To conserve cash

The pandemic has been a significant catalyst of this behaviour as younger generations have been looking for new ways to conserve cash in case of emergencies. As this demographic was the primary target for furloughs or redundancies, using BNPL for purchases seemed like a wise decision, as long as they could make the payments on time and not incur any late fees.


To pay for purchases that otherwise would have been impossible to make

With incomes shrinking during the pandemic, BNPL offered the opportunity to all demographics to manage budgets more easily and make larger, otherwise directly inaccessible purchases.


To experiment with a new trend

The millennial generation and generation Z are drawn to new, more efficient ways of doing things. They value startups and tech companies that offer frictionless new solutions to old problems.


To avoid debt

The younger consumers are afraid of piling up debt. Because of this reason, they prefer debit cards to credit cards. But BNPL offers the flexibility of a credit card without the worry of increasing their debt and paying interest.

Is BNPL here to stay?
BNPL’s place in the customer journey makes today’s Buy Now, Pay Later services so important. In the past, instalment payments were available at checkout (at the end of the customer journey), but today, consumers are influenced by BNPL earlier in the journey, specifically when making purchasing decisions. This helps remove the uncertainty around qualifying for credit or incurring credit searches that may affect credit scores.

For this reason, we predict that the providers of BNPL will become even more specialised in how they target different customers in different verticals. Specialists in Buy Now, Pay Later will become better partners to merchants as they gather more information about consumers’ shopping and budgeting habits.

Trust Payments has partnered with Zip, the first Buy Now, Pay Later provider, to join its network of payment partners, to allow its UK merchants to offer Zip at check out and help customers to pay over four interest-free instalments.