Nearly six in 10 consumers are aware of buy it now, pay later (BNPL) plans. About 45% of consumers have not used BNPL, but are familiar with it, and 14% of consumers have used BNPL, according to “The New Credit Model,” a collaboration between PYMNTS and Sezzle based on a survey of 7,024 American consumers.
Get the report: The New Credit Model: Why Financially Worried Consumers Still Want Alternatives to Traditional Credit
Consumers with less than good credit profiles are particularly likely to experience BNPL. Among “second chance” consumers who have defaults on their credit profile, 72% are aware of this option. Among the “excluded” consumers who have been excluded from access to traditional credit, 64% are aware of the BNPL. In contrast, 54% of “worry-free” consumers who have no barriers to approval for a traditional credit card or loan are aware of BNPL.
The percentages are closer among consumers of different groups when defined by their financial lifestyle. Fifty-nine percent of consumers who don’t live paycheck-to-paycheck, 56% of those who live paycheck-to-paycheck but are comfortable, and 61% of those who live hard-to-paycheck from payroll to paycheck have either used BNPL or are aware of BNPL but have not. used it.
Consumers familiar with BNPL are more interested in using it to pay for expensive, one-time retail purchases – around half of all consumers say this is how they would use it. More than 30% of “second chance” and “excluded” consumers also want to use BNPL to pay their medical bills and groceries. Moreover, more than 30% of “excluded” consumers would also use it to pay their monthly utility bills.
Several factors make BNPL an attractive option for these consumers. The top four reasons they choose BNPL options are the ability to buy without overspending, the likelihood of buying from stores that offer BNPL, the ability to shop more frequently, and its ability to help manage personal expenses.