According to a tracking report published by the research firm PYMNTS, the availability and extent of ‘Buy Now, Pay Later’ services (BNPL) are expected to grow over the next five years.
Particularly younger people prefer using this payment method over credit cards. The report stated that nearly 60% of consumers are using this payment method.
PYMNTS’ survey respondents provided several explanations for their preferences. According to respondents, ‘Buy Now, Pay Later’ payments are easier to manage than credit card repayments, there is a simple approval process, and ‘Buy Now, Pay Later’ options do not carry interest if the debt is paid back on time.
According to Insider Intelligence, this preference is fueling a surge in ‘Buy Now, Pay Later’ services. The Consumer Financial Protection Bureau (CFPB), which has plans to regulate ‘Buy Now, Pay Later’ corporations similarly to how it regulates credit card companies, has expanded regulation of these services.
However, a large number of new businesses have emerged to provide ‘Buy Now, Pay Later’ services, and by the end of 2022, the value of the sector is anticipated to exceed USD 76.20 billion in US payments volume.
Consumers Should Be Cautious
The growing accessibility of ‘Buy Now, Pay Later’ services is both a blessing and a curse for consumers. According to Christine Roberts, CEO of Citizens Pay, a ‘Buy Now, Pay Later’ service provided by Citizens Bank, many younger customers are drawn to such services since they saw their parents suffer from credit card debt during the 2008 financial crisis and many perceive ‘Buy Now, Pay Later’ services as a “safer” alternative.
This might be accurate in some circumstances. Numerous ‘Buy Now, Pay Later’ services automatically verify your payment information and plan out your next payments. This means you won’t need to keep track of when to pay back your purchases. You typically won’t pay interest on your debt if these payments are completed on schedule.