Why are so many consumers using BNPL?

  1. Buy Now Pay Later (BNPL) is here to stay. There’s no arguing with this as we see more and more established players entering the space. With the recent announcement of Apple Pay Later becoming the new (giant) kid on the BNPL block, one must wonder: Why is BNPL so popular?

RFI Global latest report into the attitudes and use of BNPL credit, ‘The Global State of BNPL: How banks and providers can champion customer interest’ found that BNPL users like the control and support that BNPL offers in managing their money, something likely to only become more important as inflationary pressures continue.


What appeals to shoppers most when they choose the BNPL option at checkout is:

  •  – no interest charges (33% of consumers across all markets surveyed)
  •  – improved cash flow management so that they can pay other expenses (28%)
  •  – convenience (33%)
  •  – helping them to budget (31%).

“BNPL users like the control and support that BNPL offers in managing their money”


In other words, consumers globally are now using BNPL services as a way to manage their online and in-store purchases according to their own cash flow, compared to alternatives like credit cards. The majority of BNPL users are millennials who want to manage their money more efficiently and avoid debt. Indeed, our research suggests that most BNPL users are averse to debt. They want to buy what they can afford and are aware of the dangers and cost of credit.


No-interest, no-fee and convenience have boosted BNPL uptake

In Australia, Canada, Mainland China, Mexico and the UK, no-fee or interest is the leading reason for using BNPL. Whereas in France, Hong Kong, India, Singapore and the USA, it is convenience that drives usage. This payment experience and ease of checkout is important to encourage repeat usage.


Against a backdrop of soaring inflation, consumers likely to use BNPL for bigger ticket items as well as household expenses

Although online retail dominates BNPL purchases – particularly fashion where 1 in 5 online purchases in Australia were paid through BNPL last year – consumers are interested in using it for higher value items such as electrical goods, household appliances and furniture. Further, around a third of consumers in Australia and the UK have indicated they would use BNPL to pay for everyday expenses such as household bills (38% in Australia, 34% in the UK), groceries (37% in Australia, 29% in the UK) and petrol (27% in Australia and the UK).


Younger consumers turning to BNPL 

There is a sharp distinction for BNPL usage among millennials (aged 26-41 years) and Gen Z (aged 18-24 years). In maturing markets consumers aged 25-34 years are proving to be early adopters, with India (74%) and the US leading the way (61%). In Mainland China and India, Gen Z have flocked to BNPL with 89% and 73% of consumers under 25, respectively, using the service. In Australia, over 60% of millennials have used BNPL. Meanwhile, in Hong Kong, the greatest uptake has been among consumers aged 45-54 years.


Online dominates but in-store use is growing

Globally most people are using BNPL when shopping online, but there is growing in-store use. In Australia 30% of consumers say they have used BNPL to make an online purchase and 20% claim they have used BNPL in-store. Creating a better in-store experience and growing awareness of acceptance for in-store will be key to further uptake for offline purchases.


Is there still space for banks and other established players?

Traditional providers entering the BNPL space will have to compete with the customer experience offered by pureplay providers like Afterpay/Clearpay, Klarna and Affirm but may have an advantage in the form of trust. More than half (53%) of consumers in the UK would consider a BNPL service offered by a bank extremely appealing compared to 35% who rate a dedicated third party BNPL provider the same. Consumers surveyed feel that a BNPL service offered by a bank would be more secure (36%), more widely accepted (31%), and more reliable (31%).


“More than half (53%) of consumers in the UK would consider a BNPL service offered by a bank extremely appealing”


Banks enjoy a high degree of trust with 44% of consumers in the UK reporting that they trust banks, a good sign for Nationwide’s entry to the market. Apple also enjoys a relatively high degree of trust (23%) in comparison to pureplay BNPL services (14% of consumers highly trust Clearpay). This highlights the window of opportunity for the new brands to gain trust in this space. However, they will need to differentiate in order to encourage existing BNPL users to switch away from the services they are currently using or overcome key barriers to drive uptake among non-users.


Watch RFI Global BNPL expert Kate Wilson give an interview on Ausbiz TV about the consumer views and perceptions around BNPL in Australia.




For an overview of our latest consumer banking findings and to access more insights from our BNPL Global Council reach out to marketing@rfi.global.


Kate Wilson

Global Head - Consumer Credit, Deposits and Payments at RFI Global



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