BNPL surges in usage amongst US consumers

Thursday 30 May 2024 14:50 CET | News

Financial guidance platform NerdWallet has revealed that Buy Now, Pay Later (BNPL) plans surged in popularity, becoming the second-most used credit payment form in the US. 

According to Nerdwallet’s findings in its ‘2024 State of Consumer Credit Report’, BNPL plans are currently the second-most leveraged form of credit payment among US customers, with nearly 25% recently using it. The company’s research, which polled 2,061 US adults in April 2024, underlines that credit cards are the most commonly utilised form of credit and 66% of respondents stating that they used them in the past 12 months.

NerdWallet has revealed that Buy Now, Pay Later (BNPL) plans surged in popularity, becoming the second-most used credit payment form in the US.

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Considering that BNPL programs often do not require a credit check or application process, consumers started to adopt them, thus increasing their popularity. On the other hand, only about 10% of respondents used a cash-advanced app in the last 12 months, while 6% leveraged a payday loan during the analysed period. The surge in BNPL usage can be attributed to the increasing cost of living, with staple items remaining expensive and borrowing costs being high. This made shoppers turn towards BNPL to pay for essentials, including personal care items, with 8% of adults participating in the survey stating that they used BNPL for necessities.

However, as this type of credit started to gain popularity, NerdWallet highlighted that some modifications to the payment structure were to be made. BNPL companies are expected to soon be required to comply with federal protections that cover credit card usage in the US. For example, the Consumer Financial Protection Bureau recently
announced that such firms need to provide customer protections, including refunds for returned products, analyse merchant disputes, and pause payments during these investigations. Additionally, they were required to offer bills with fee disclosures. According to officials, this change has the consumer as its focus, with disputes being a considerable pain point for them. To support this, 18% of US adults in Bankrate’s survey said that they faced challenges returning items or receiving a refund via a BNPL plan.

Currently, some BNPL providers have provisions in place if a consumer requires a return, but the BNPL sector needs more consistency and predictability. When the CFPB announced consumer protections, Klarna replied in a statement saying that it already offers such safeguards for users. The company then went on to state that it would be useful to put regulations in place regarding this.

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Keywords: BNPL, payment methods, online shopping, online payments, research
Categories: Payments & Commerce
Companies: NerdWallet
Countries: United States
This article is part of category

Payments & Commerce


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