Consumer Expectations for BNPL Services

The convenience and flexibility of deferred payment plans, such as credit card installment plans and buy-now-pay-later (BNPL) options, are making them increasingly popular among consumers. However, to maximize their potential, BNPL providers need to meet certain consumer expectations and demands.

How Consumers Use BNPL and Credit Card Installments

In a recent study conducted by PYMNTS Intelligence and AWS, it was revealed that credit card installments are currently used more often and for larger purchases than BNPL options. This is mainly because they offer features that BNPL does not yet provide. Consumers desire BNPL to offer the same features as credit card installment plans, with 38% of BNPL users indicating that rewards would improve their satisfaction with BNPL lenders.

Alongside rewards, increased in-store availability and higher credit limits were listed as key features by approximately 32% of BNPL users. These were followed by demands for a simpler application process and extended installment plans, both of which were highlighted by approximately 27% of users.

Growing Interest in BNPL

Despite these current limitations, the study found that consumers plan to increase their use of BNPL in the coming year. This is especially true for those who are already using it. Specifically, 43% of current BNPL users plan to continue using it in the next year, and 15% of non-users plan to start using it. This signals a growing interest in BNPL as an alternative to traditional credit.

Demographic Differences in Usage

The study also revealed variation in usage patterns of credit card installments and BNPL across different demographic groups. Older and high-income consumers tend to use credit card installments more frequently, while millennials and Generation X consumers are the most frequent users of BNPL.

Different types of purchases are associated with each method. Credit card installments are slightly more popular for grocery purchases and non-grocery retail products, while clothing, beauty products, and appliances are the most common retail items purchased with BNPL.

Satisfaction Levels and The Path Forward

Overall, the majority of BNPL users reported being very or extremely satisfied with their options. However, satisfaction levels vary among different demographic groups, with younger and low-income consumers being slightly less satisfied.

To fully harness the potential of BNPL, providers must incorporate the features that consumers desire, such as rewards programs, higher credit limits, and more in-store availability. By doing so, BNPL can become a profitable tool for retailers to increase sales and meet customers’ financial needs.