Still, I believe you should tread carefully. There’s certainly a place for buy now, pay later in the payments ecosystem. But if they know exactly how much they owe per month, and exactly how many weeks or months the loan will last, this makes them feel better. The sweet spot is a debt-conscious consumer who wants the flexibility to finance a purchase but with the certainty of a clearly defined payoff date. Bank of America adds that they’re usually in their 30s and the typical purchase they finance is between $200 and $500. They tend to be college graduates and the vast majority have credit cards. But nowadays, most buy now, pay later users are the so-called HENRYs (high earners not rich yet).Ĭornerstone Advisors reports that seven in 10 buy now, pay later customers earn more than $75,000 annually. This is still true to some extent – picture the Gen Zer without a credit card who wants to finance some new clothes, electronics or furniture. Who uses buy now, pay laterĬonventional wisdom was that buy now, pay later was for young people without much money or much credit. Still, just like you and I might order different meals from a restaurant menu, we might make different payments choices. I suggest using a credit card and paying it off before interest accrues, thereby eliminating the one big con and enjoying credit cards’ superior rewards programs, fraud protection and other buyer protections (such as extended warranties and purchase protection).ĭebit cards and buy now, pay later companies don’t come close in any of those areas. I see the appeal, but it’s not my preferred payment method.
The application process is quick and easy, but even this cursory glance can result in rejections or higher rates for applicants with lower credit scores or a lot of debt. The terms vary depending on the service, the retailer and your personal circumstances. Other times, stretching beyond those first six interest-free weeks can cost you substantially (up to 30% APR). Sometimes you can get a lot more time with 0% APR, like Affirm’s 39-month 0% partnership with Peloton that allows some customers to pay as little as $49 per month for a bike worth nearly $2,000. The most common example involves paying off a purchase in four installments spread over six weeks with no interest. PayPal currently offers two different buy now, pay later concepts ( PayPal Credit, which centers around a six-month 0% deferred interest promotion and Pay in 4, another of the interest-free six-week installment plans).
#Buy now pay later electronics no credit skin
Mastercard also recently announced its BNPL plan, called Mastercard Installments, in September 2021.Īnd PayPal has a lot of skin in this game as well, dating back to its 2008 acquisition of Bill Me Later. American Express launched Pay It Plan It in 2017 and the Citi Flex Plan followed in 2020. Large, established financial institutions have caught on to the popularity of this installment plan product, too. The Accenture study also found that users of Afterpay, one of the most popular BNPL platforms, were only half as likely as credit card users to let their account become 90 or more days past due. But with many additional categories expected to become available for BNPL purchase, Accenture projects that BNPL could account for more than 10% of U.S. Debit card spending over the same time period grew 43%, while credit card spending was up just 8%.Īs a fledgling payment method in the U.S., BNPL is mostly used in just a few categories: electronics, fashion, health and beauty and home goods. In contrast, paying with plastic has inched up much more modestly.
by the time 2021 concludes.Ĭompared to January 2020, Accenture found that BNPL spending had increased a whopping 230% by June 2021. But the growth of this relatively new payment method is on a tear, with projections forecasting that BNPL could account for 6% of online retail spending in the U.S. Buy now, pay later grew in 2021īuy now, pay later (BNPL) only represents about 2% of Americans’ spending on online retail purchases so far in 2021, according to a recent analysis by Accenture. Another big player, Affirm, saw a 90% stock price jump in January 2021 after its IPO. Klarna counted its 15 millionth market user, signifying 205% year-over-year growth in monthly users. One of the leading players, Australia-based Afterpay, reported $6 billion in incremental sales and $3 billion in benefits for small businesses in 2020. Online shopping has been on a tear since 2020, and the “ buy now, pay later” industry rode its coattails into 2021.
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