Nearly six out of 10 consumers are aware of buy now, pay later (BNPL) plans. About 45% of consumers have not used BNPL, but are familiar with it, and another 14% of consumers have used BNPL, according to “The New Credit Model,” a PYMNTS and Sezzle collaboration based on a survey of 7,024 U.S. consumers.
Get the report: The New Credit Model: Why Financially Worry-Free Consumers Still Want Alternatives To Traditional Credit
Consumers with credit profiles that are less than good are especially likely to be familiar with BNPL. Among “second-chance” consumers who have blemishes on their credit profiles, 72% are aware of this option. Among “shut-out” consumers who have been excluded from conventional credit access, 64% are familiar with BNPL. In contrast, 54% of “worry-free” consumers who have no barriers to approval for a traditional credit card or loan are familiar with BNPL.
The percentages are closer among the consumers from different groups when defined by financial lifestyle. Fifty-nine percent of consumers who do not live paycheck to paycheck, 56% of those who live paycheck to paycheck but are comfortable and 61% of those who live paycheck to paycheck with difficulty have either used BNPL or are familiar with BNPL but have not used it.
Consumers who are aware of BNPL are most interested in using it to pay for expensive, one-time retail purchases — about half of all consumers say that’s how they would use it. More than 30% of “second chance” and “shut-out” consumers also want to use BNPL to pay for medical bills and groceries. In addition, more than 30% of “shut-out” consumers would also use it to pay monthly utility bills.
Several factors make BNPL an attractive option to these consumers. The top four reasons they choose BNPL options are the ability to purchase without overspending, more likely to shop at stores that offer BNPL, the ability to purchase more frequently and its ability to help manage personal spending.