In its early days, Buy Now, Pay Later (BNPL) — or installment payments — started as a subset of consumers searching for more ways to budget and improve finances, but it was rapidly adopted across the board. BNPL quickly became a mainstream payment offering, and today, it is practically ubiquitous: virtually every large and midsize merchant in developed economies has considered, is in the process of launching or has already launched a BNPL solution. Today’s BNPL Market One surprising — but generally positive — outcome of the COVID-19 pandemic’s effects on the U.S. economy was BNPL lending’s rise to stardom. Fast forward to the present, and according to Mercator Advisory Group, more than 50% of U.S. consumers have used a BNPL option in the past 12 to 14 months. And according to the 2021 Primax Payments Pulse, 22% of respondents indicated they would be likely or extremely likely to use a BNPL option if available through their bank. Aite-Novarica’s October 2021 Buy Now, Pay Later Market Overview Report notes that installment solutions offered by seven of the leading BNPL vendors currently serve more than 800,000 merchants and over 100 million consumers. The benefits of BNPL are evident, making it clear why the offering quickly rose to popularity. BNPL offerings allow consumers to play a more active role in managing their financial lives, and they are easy to use and convenient. According to Aite-Novarica, BNPL vendors indicate their merchants see conversion rates improve by 20% to 30%, as offering installment options helps shoppers see a purchase as more affordable, resulting in lower cart abandonment rates. In addition, merchants report experiencing higher basket sizes, with average order value increasing by 40% or more after adding BNPL to their checkouts. Merchant partners also see up to 55% of BNPL users making repeat purchases. By Cody Banks MVP, Payments and Fraud Strategy Primax What Banks and Financial Institutions Should Know about Installment Payments coloradobankers.org 22
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