Buy Now, Pay Later Loans are a burden on traditional consumer finance
ROCKVILLE, Md., October 4, 2021 / PRNewswire / – For traditional financial firms and banks, Buy Now, Pay Later (BNPL), or Point-of-Sale Installment Loan (POSIL) financing requires an innovative, next-generation mindset. The competition with fintechs for market share in installment loans and customer loyalty is forcing traditional lenders, who rely on decades of constant income from the credit card sector, to rethink their business models for consumer credit.
In his just published Buy now, pay later: installment loans at the point of sale (September 2021) Report estimates, Packaged Facts, that the BNPL installment loan market in the US has grown on $ 250 billion in 2020 with an average annual growth rate (CAGR) of 33% over the previous five-year period.
While there have been concerns that the economic uncertainty associated with the global pandemic could affect the BNPL installment loan industry, it has not, according to the report’s author Elizabeth Rowe.
Instead, consumers shifted much of their retail spending to debit cards and BNPL installment loans as they paid off credit card debt and curbed household spending, and put guard rails around their budgets. The other main beneficiaries of changing consumer payment preferences have been debit card service providers.
A proprietary packaged facts August-September 2021 The online survey conducted for this report shows that 34% of the Internet-active US adult sample of 2,000 have taken out “buy now, pay later” loans, nearly double the 18% figure from early February.March 2020 Opinion poll. Almost half (47%) of the youngest BNPL loan customers have used PayPal Credit as their provider. Affirm, Afterpay and Klarna also receive significant shares.
While “BNPL” and “POSIL” lending are used worldwide, the actual products available in individual countries and / or geopolitical areas reflect their specific characteristics. Each market’s solutions are tailored to consumers’ household wealth, their consumer credit experience, their preferences for particular payment methods, and the general acceptance and use of the internet by the population – especially mobile commerce.
In some less affluent markets, BNPL funding is a mature pillar of consumer credit. In the wealthiest economies, dynamic levels of fintech ingenuity and competition have helped BNPL installment loans grow faster than any other consumer credit product and twice as fast as credit cards. That is why this credit category is hot.
Packaged Facts, a division of MarketResearch.com, publishes market intelligence on a variety of consumer market topics, including consumer demographics and buyer insights, food and beverage markets, consumer financial products and services, consumer goods and retail, and pet products and services. Packaged Facts also offers a full range of custom research services. Reports can be purchased from our corporate website and are also available through MarketResearch.com.
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SOURCE Packaged facts