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BNPL Statistics Show an Evolving Market with Regulatory Potential

The constant bombardment and latest news bite about Buy-Now-Pay-Later can leave your head spinning. We’ve put together some of the most interesting BNPL statistics to show how this space is evolving.

The BNPL statistics we’ve aggregated show information ranging from consumer behavior to how the companies adopting BNPL are faring.

(Content updated 3 January 2023)

 

Bright Side of BNPL

$112 billion in consumer spending using BNPL in 2022

300%  User growth per year since 2018

230%  Increase of US spending on BNPL since 2020

51% merchants that accept BNPL loans

$5 billion BNPL volume processed in Q3 2022 by PayPal

4.54 million Apple Pay Later users in 2022 project to grow to 56.5 million in 2026

BNPL is in a growth period, everything you buy from clothing to car rental to veterinarian services comes with a BNPL option. However, the product still only holds a small portion of e-commerce transactions. That said, it’s a space to watch.

 

(LendingTree; Accenture; Payments Dive; Insider Intelligence; Juniper Research)

 


 

Less Bright Side of BNPL

54% increase in fraud attacks on BNPL in 2021

32% of users prioritize BNPL bills over paying rent, utilities or child support

$50.7M of BNPL late fees paid by UK consumers in 2020

$665 average outstanding balance

40% of BNPL users said they’d paid late

As with all tech boons, BNPL experienced pitfalls. Operating losses have been seen at several of the companies providing BNPL over the years. Recently a proposed merger was called off between BNPL rivals Zip Co. Ltd. and Sezzle Inc. citing shareholder interest as the reason.   And on the consumer side, it’s easy for consumers to get in over their heads and wind up with a debt problem.

 

(Sift; Payments Dive; DebtHammer; YahooFinance; Credit Karma; LendingTree; CFPB)

 


 

Regulating BNPL

United States

A September report on BNPL issued by the CFPB highlights areas of risk of consumer harm. Director Chopra also shared that based on report findings, next steps include:

  • Identifying potential interpretive guidance/rules for BNPL
  • Ensuring that BNPL firms are subject to appropriate supervisory exams, similar to credit card companies
  • Looking into data surveillance practices of BNPL providers as many are building valuable digital profiles of users that could be harvested and monetized
  • Uncovering options for development of appropriate credit reporting practices

United Kingdom

Year end of 2022 in the UK: FCA to publish a consultation on draft legislation

“Buy-now, pay-later can be a helpful way to manage your finances but we need to ensure that people can embrace new products and services with the appropriate protections in place,” said John Glen, economic secretary to the finance ministry.”

While not currently regulated in the US, the CFPB opened an inquiry late in 2021 into five of the largest service providers: Affirm, Afterpay, Klarna, PayPal and Zip. The CFPB asked each provider to give data to clarify the risks and benefits of the product to consumers. The result of the inquiry was a report issued by the CFPB in September that highlights several areas of risk for consumer harm and upcoming actions to hold BNPL firms accountable.  

 

(Reuters; CFPB)

 


 

Why People Use BNPL Options

61% of Americans have used BNPL services to pay for an item they needed

53% have used BNPL “out of necessity”

22% use credit cards to cover BNPL purchases

~60% of consumer say inflation makes them more likely to use BNPL products

95% of U.K. purchases are for £180, or less. A minority are for items up to £2,000

  • Average BNPL purchase was similar to credit cards at £65

 

BNPL Statistics Number of Times in 6 months to apply for BNPL

 

(CreditKarma; LendingTree; Experian

 


 

BNPL and the Case Against Credit Cards

67% of BNPL users believe it should replace credit cards

50% consumers believe they need options beyond credit cards for making purchases and paying in installments

76% consumers who had difficulty getting approved for loans blame credit cards:

  • 26% aren’t able to secure a loan because they defaulted on a credit card for a small amount (less than $2,000)
  • 30% couldn’t secure a loan because they paid their credit card bill late (less than three times)
  • 19% aren’t able to secure a loan because the vendor or merchant incorrectly charged or reported a transaction

Consumers always want options and the BNPL option is clearly an active option now. With nearly every merchant offering a BNPL loan at point of check out (online or in stores) the growth is likely to continue.

If you can’t beat ‘em join ‘em: Virgin Money announced the Gen Z-friendly Slyce card, a traditional BNPL product. But, they say, Slyce has the “additional benefits of helping customers build credit scores and being issued a fully-regulated bank with controls, protections and safeguards.”

Be on the lookout for more hybrid versions of card and BNPL across the industry as lenders look to meet customer need.

 

(Altfi.com; themoneymanual.com)

 


 

Who Uses BNPL?

45% women and 42% men

58% GenZ  |  54% millennials  |  44% GenX  |  22% Boomers

42% people aged 16-24 used a BNPL product last year

Women who are GenZ (18-25 years old) and people making $50,000 – $75,999 most likely say that they’ve used BNPL.

 

(LendingTree; BCC; J.D. Power)

 


 

Watch the Statistics and Activities Around BNPL

More traditional financial institutions are getting into the BNPL space. HSBC, Barclays, Virgin Money and NatWest are all launching BNPL options.

We will be closely watching—and planning for—new rounds of regulations, changes in credit reporting, continued product evolution and challenges in collections. We’ll be updating our BNPL statistics periodically.

Bookmark this blog to catch any new updates to the fast-paced world of BNPL.

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