Who are buy now, pay later borrowers, and what are they buying?
Corrects month in paragraph 7 to June
BNPL spending projected to hit $18.5 billion in Q4 2023
71% of BNPL users also had credit card debt in 2023
Most BNPL users make on-time payments, but credit scores often subprime
By Hannah Lang
Oct 10 (Reuters) -As Amazon's Prime Day kicked off the holiday shopping season this week, U.S. consumers are expected to spend a record $18.5 billion using buy now, pay later for purchases in the last quarter of the year, according to projections by data firm Adobe Analytics.
Buy now, pay later (BNPL) exploded in popularity as the COVID-19 pandemic forced more shoppers online, driving $75 billion in online spending in 2023, up 14.3% from 2022, according to Adobe.
BNPL providers like Affirm AFRM.O and Klarna boost shoppers' purchasing power by lending them the money for purchases, which they repay in installments spread over as many as 36 months, although the most common products are four-installment payment plans.
Because most BNPL providers do not report their loans to the credit reporting agencies, comprehensive data on BNPL delinquencies is scant. The Financial Technology Association, which counts three BNPL lenders among its members, reports less than a 2% delinquency rate among those companies compared to nearly 9% for credit cards.
Still, 71% of BNPL users also had credit card debt in 2023, according to the Federal Reserve Bank of Boston.
Afterpay -- which is owned by Block SQ.N -- reported that 96% of customers paid all of their installments on time during the fourth quarter of 2023, while Klarna reported that 96% of its pay-in-four users in 2023 paid off their bills early or on time.
For the three months ended June 30, 2024, Affirm said 2.4% of its monthly loans were delinquent by more than 30 days.
Here are five charts illustrating how BNPL is used:
SHARE OF ONLINE SPENDING
Consumers spent more than $731.5 billion online from January through September this year, with $57.6 billion of that coming from BNPL purchases, according to Adobe Analytics. That's up 10.3% from the same period in 2023.
The record $18.5 billion in BNPL purchases Adobe is predicting for the last quarter this year would be a year-on-year increase of 11.4%.
ON-TIME PAYMENTS
Most BNPL users make their full payment on time, according to the Federal Reserve Bank of Philadelphia, and fewer shoppers were late on their payments between 2022 and 2023.
However, the Philadelphia Fed said that it was unclear if shoppers appeared "less risky" because of changes in BNPL companies' underwriting methods, or if there was a shift in the pool of consumers who were attracted to BNPL from 2022 to 2023.
CREDIT SCORES
The U.S. Consumer Financial Protection Bureau in 2022 reported that most BNPL users who also had revolving balances on at least one credit card had credit scores that were subprime (between 580 and 619) or near prime (between 620 and 659).
Because many BNPL lenders do not furnish data to the credit reporting agencies, consumer advocates have warned that BNPL debt is a blind spot for regulators, other lenders and BNPL lenders themselves.
In May, the CFPB issued an interpretive rule applying new requirements for BNPL lenders, mandating that companies must investigate consumer disputes, refund products that have been returned and provide periodic billing statements. The companies are not required to assess a consumer’s ability to repay a loan.
AVERAGE MONTHLY PAYMENT
Fifty-eight percent of BNPL users this year reported having an average monthly payment of $100 or less, according to The Motley Fool, a research firm. In contrast, Experian reported that the average monthly credit card payment users had in February was $202.
Only 2% of BNPL users had an average monthly payment of more than $1,000.
USES ACROSS GENERATIONS
For shoppers considered Generation X, Millennials and Generation Z, or those under age 60, clothes were the most popular BNPL purchases last year, per PYMNTS, a news provider focused on payments, while more Baby Boomers used BNPL to purchase furniture.
Groceries were also a popular BNPL purchase across generations. The CFPB found that BNPL usage for everyday purchases like groceries, gas and utilities was up 434% in 2022 from 2020 as consumers faced rising prices.
Slice of online spending https://reut.rs/4dHNyhf
Buy now, paid later? https://reut.rs/4eZRdrT
Primetime borrowing https://reut.rs/3ZZKYjo
Average monthly payment https://reut.rs/3U0irXf
Generational change https://reut.rs/4gRFhKx
Reporting by Hannah Lang in New York; editing by Michelle Price and Aurora Ellis
免责声明: XM Group仅提供在线交易平台的执行服务和访问权限，并允许个人查看和/或使用网站或网站所提供的内容，但无意进行任何更改或扩展，也不会更改或扩展其服务和访问权限。所有访问和使用权限，将受下列条款与条例约束：(i) 条款与条例；(ii) 风险提示；以及(iii) 完整免责声明。请注意，网站所提供的所有讯息，仅限一般资讯用途。此外，XM所有在线交易平台的内容并不构成，也不能被用于任何未经授权的金融市场交易邀约和/或邀请。金融市场交易对于您的投资资本含有重大风险。
所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。
本网站上由XM和第三方供应商所提供的所有内容，包括意见、新闻、研究、分析、价格、其他资讯和第三方网站链接，皆保持不变，并作为一般市场评论所提供，而非投资性建议。所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为适用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。请确保您已阅读并完全理解，XM非独立投资研究提示和风险提示相关资讯，更多详情请点击 这里。
