BNPL – Impact on the behavior of customers

With the rise in popularity, BNPL is changing the way customers think about credit. Affirm, the BNPL provider went public in January 2021 and announced a buy now pay later debit card. Ascent surveyed 2000 Americans about their BNPL habits in July 2020, and it followed that survey again with another in March 2021 and found around 50% growth in less than a year. Curious to know more? We spoke with a famed L.A. jewelry retailer utilizing BNPL options for its customers seeking pearls and all sorts of pearl jewelry.

1. The continued rise in online shopping 

Since BNPL is an interest-free payment option, customers are using it rapidly to satisfy their shopping demands. The trend of online shopping has seen an unexpected rise in the past few years, and BNPL has contributed a lot to this graph. This new concept has brought all fancy items within reach of the customers. According to the Global Payments Report 2021 by Worldpay by FIS, BNPL is India’s fastest-growing e-commerce payment method and is expected to grab 9% of the total market share by 2024. This growth is rapidly changing the consumer’s behavior and adding fuel to other flexible payment options.

2. Taking customers towards impulsive shopping 

According to Dr. Carolyn Mair, a behavioral psychologist, business consultant, and author of “The Psychology of Fashion,” the BNPL approach offers the customers a great deal of temptation, which gives rise to impulsive shopping. This model encourages customers to check out with a cart fuller than they had intended. Cardify.ai’s report claims that customers use BNPL out of choice and don’t need to buy the luxuries they might not otherwise purchase. This payment vehicle is evolving while motivating the customers to splurge on the things they would have never bought before.

3. Customers are not fascinated with credit cards anymore.

The rat race for getting credit cards has almost vanished now, thanks to the Buy Now Pay Later concept introduction. This flexible payment option has shifted the customers’ attention from plastics by offering them transparency and simple terms and conditions. BNPL has mainly gained hype among the youth who often find it hard to deal with the credit card’s baffling terms of agreement. With BNPL as a choice, consumers don’t see it necessary to be involved in the hassle of applying for a credit card and then understanding its terms and conditions. According to the Financial Brand, 47% of the customers use BNPL to avoid paying credit card interest charges.

4. Making customers loyal towards the merchant 

Customers’ loyalty depends on how seamless the experience they get at the time of checkout. Buy Now Pay Later has eliminated the stress of entering the card number or checking the savings account for the money. Just tap on the BNPL option and buy your favorite item. It makes customers loyal to the merchant who offers this payment option. According to the data from Ascent, 36% of the American BNPL users use this service once a month or more.