Is BNPL the New Credit Card?
If you thought buy now, pay later (BNPL) was primarily used to purchase electronics, furniture and clothing you’d be right, but that is changing – and changing fast. The fourth largest category for BNPL use is vehicle-related bills and expenses. More and more of these “everyday” expenses are being paid with BNPL, which also includes groceries, dining out, travel and entertainment.
Why is BNPL growing with everyday retailers?
First what do we mean by an “everyday” retailer? We’re not talking about stores like Nike or Best Buy, but rather more necessity-based places like the supermarket or gas station, along with service retailers like the salon or Air Canada. Car repairs are usually expensive, so it’s no wonder more and more people are also turning to BNPL to stay on budget for sudden expenses.
Why is BNPL appealing for everyday purchases?
If you want those $200 shoes but you’re on a budget, BNPL can make it more manageable by splitting it into four payments of $50 without the interest you’d be charged when doing the same on a credit card.
People are quickly realizing that same tactic works just as well for the next vacation or can help soften the financial blow caused by a broke-down car. This everyday usage is really appealing to the older Gen X consumers who now make up the second largest BNPL user group – 57% have tried it and 34% have used it more than once.
In fact, 23.75% of consumers are using BNPL for groceries – and that’s higher than books, movies, music and games! This trend is simply more evidence that BNPL is being adopted by consumers of all ages as a legitimate alternative to credit cards.
Should BNPL eroding credit card use be a surprise? No!
Before BNPL arrived on scene, if you didn’t have the full amount for a purchase, you either had to wait and save, or get it now with interest on a credit card. But now that you can split purchases into four equal, interest-free payments, more and more consumers are taking advantage of BNPL.
And like a credit card, using BNPL is just as easy and convenient, if not more so. BNPL is designed around today’s technology. Customers can pay in instalments by tapping their phone in store, or online with just a click.
- 28% pick BNPL at checkout because it’s the “easiest way for me to pay.”*
- 26% say they used it because it was offered upon checkout.
BNPL is good for budgets
Today, more consumers are learning the value of sticking to a budget. Unexpected events like car repairs are just a reality of life, and 38% of BNPL users say it helps them budget and better manage cash flow. It makes these kinds of expenses more manageable and the transparent terms make it easy to pay off quickly.
And with inflation at its highest rate since 1991 (have you seen the price of gas lately?!), BNPL is perfectly poised to help consumers combat these very expensive times.
Absolutely all types of businesses need BNPL!
In this new reality of financial technology, innovation in the payment space does indeed boost sales. That’s why one in four retailers already accept BNPL and that will continue to grow as more consumer ask for, even demand, BNPL as a payment option.
No longer are consumers just using BNPL to buy clothes or shoes. BNPL is quickly becoming the new credit card and its interest-free benefits are not being lost on consumers when they buy groceries, plan vacations or visit the salon. On top of the monetary advantages of BNPL, users are also extremely satisfied with the user experience at Zip:
- 7 in 10 Zip users prefer Zip to other BNPL services.
- 55% of merchants say that BNPL offers a better customer experience.
- 61% of Zip grocery customers consider ease of use our best feature.
- 93% of grocery customers are highly satisfied with their Zip experience.*
In the end it’s all about giving the customers what they want and this trend proves they want BNPL at checkout. And we all know, a satisfied customer leads to repeat visits, more sales and higher average order values for your business.
Come learn how you can add BNPL to your checkout in just minutes.
*Source: Zip Research