The year 2021 proved to be monumental for the buy now, pay later (BNPL) market, with usage more than doubling by the end of the year. BNPL plans are still nascent compared to traditional payments methods, such as credit and debit cards, but the payment method’s use is poised to climb significantly in the next 12 months.
PYMNTS’ research shows that more than half of consumers are interested in using BNPL this year, and if they act on that interest, the increase in usage could make 2021’s growth pale in comparison.
These are among the key findings from the Banking On Buy Now, Pay Later: Installment Payments And FIs’ Untapped Opportunity, a collaboration between PYMNTS and Amount. The report, based on a survey of 2,237 U.S. consumers that was conducted between Nov. 5 and Nov. 10, 2021, polled them on which features they wanted from BNPL providers. The survey evaluated consumers’ BNPL usage and interest in accessing bank-backed BNPL plans.
More key findings from the study include:
70% of current BNPL users say they would be interested in using BNPL plans from their banks if such offerings were available. The interest is high among those who use such plans and those who are not users. Just 7% of consumers who use BNPL say they are less interested in a bank product than one offered by another company.
47% of consumers annually earning more than $100,000 are interested in bank-issued BNPL plans. The interest is greater at the higher income levels. Forty-two percent of consumers with annual incomes of $50,000 to $100,000 and 39% of consumers earning less than $50,000 also are interested in bank-backed BNPL plans.
53% of consumers say trust is the most important factor when choosing a lender for a short-term credit product. Banks have the edge over other FinTechs when it comes to cultivating and retaining consumers’ trust, given the extent to which consumers say trust in a credit provider is a key factor that influences their interest in bank-issued BNPL plans.
Banks have significant potential to disrupt the BNPL market, as consumers put more trust in the products and services their banks offer compared to those that FinTechs provide. Banks looking to enter the BNPL market have to demonstrate their ability to meet consumers’ expectations for reliable, safe and easy-to-use payment methods. Those that move quickly and make a clear impression on consumers will see the most success.
To learn more about consumers’ interest in using bank-backed BNPL plans, download the report.