Consumers are turning to Buy Now Pay Later to manage their finances amid soaring inflation, says RFI Global
LONDON, March 21, 2022 /PRNewswire/ — Millions of consumers around the world are now choosing Buy Now Pay Later (BNPL) services as a more responsible way to manage the cost of their online and in-store purchases based on their own cash flow, compared to to alternatives such as credit cards.
A new report on attitudes and use of BNPL credit across Europe, Asia Pacific and the United States, ‘The State of the World BNPL: How Banks and Providers Can Advocate for Clients’ Interests’ was published today by Global RFI, the only global data and information consulting firm exclusively dedicated to financial services. He finds that instead of sending people into a dangerous spiral of debt, the BNPL helps them better manage their cash flow by offering short-term products with no interest and no fees, thus avoiding revolving credit card debt. and bank charges.
RFI Global’s BNPL Tracker surveys more than 14,000 consumers in 11 countries in Europe, Asia Pacific and the United States twice a year on their attitudes towards financial payment services such as BNPL and their use of them.
What attracts buyers the most when choosing the BNPL option at checkout (across all markets studied) is: the absence of interest charges (33%), the convenience (33%), better management cash flow so they can pay for other expenses (28% globally) and helping them budget (31%).
Consumers surveyed by RFI Global display a level of debt aversion and unwilling to buy things they cannot afford, even ranking this as one of the main reasons they do not use BNPL . Standard Chartered Future Money Survey found that since the pandemic, people around the world were most concerned about “dealing with daily expenses” (37%). Rising inflation will further increase people’s efforts to better manage their money.
“The majority of BNPL users are millennials who want to manage their money more efficiently and avoid debt,” said Kate WilsonGlobal Head of Consumer Credit, Deposits and Payments at RFI Global. “Indeed, our research suggests that most BNPL users are averse to debt. They want to buy what they can afford and are aware of the dangers and cost of credit.
“BPL’s Simple Credit Model gives them a convenient way to spread the cost of certain purchases over several weeks or months in equal payments, helping to budget without resorting to a loan, overdraft, or paying out-of-pocket expenses. credit cards. They can buy what they want, when they want, and take full advantage of promotions or sales.”
Best interests at heart, but trust still up for grabs
Despite BNPL’s growth, consumers trust banks more than BNPL’s pureplay providers such as Afterpay, Clearpay, Klarna and Affirm, according to the RFI Global report. Overall, they feel that fintechs have their interests at heart and do not associate them with hidden fees and charges. Satisfaction scores tend to be high with these pureplay providers, making it extremely likely that they will use the services again.
In the United Kingdom, for example, consumers surveyed believe that a BNPL service offered by a bank would be more secure (36%), better accepted (31%) and more reliable (31%). More than half (53%) of consumers would rate a BNPL service offered by a bank as extremely appealing, compared to 35% who similarly rate a third-party provider dedicated to BNPL.
“Consumers’ high degree of trust in banks offers them the opportunity to launch their own services,” suggests RFI’s Wilson. “Some banks are already getting started – such as Barclays through its partnership with Amazon – and many more are planning to launch BNPL services. orientation that fintech vendors provide a great customer experience. They will also need to remain competitive in terms of pricing and other incentives. Banks have a limited window of opportunity to do this before BNPL fintech brands win their own- same customer trust and loyalty.
Barriers for banks
However, the report highlighted some hurdles banks need to overcome. In particular, the perception that a service offered by the bank would be more expensive (35%), more complicated to use (24%) and would offer fewer offers and promotions (23%).
There are also concerns about the impact on credit rating and hidden fees. In France for example, 45% of consumers fear that simply using BNPL could impact their credit rating (compared to 4% in the UK and 5% in the UK). United States). More than a third of French respondents (37%) do not trust themselves to make regular scheduled payments (compared to 5% in the UK and 9% in the US).
Other report highlights:
- Zero Interest, No Fees, and Convenience Drive BNPL Adoption – In Australia, CanadaMainland China, Mexico and in the UK, the absence of fees or interest is the main reason for using BNPL. Whereas France, hong kong, India, Singapore and the United States, convenience drives use. This payment experience and ease of payment is important to encourage repeat use.
- Amid soaring inflation, consumers are likely to resort to BNPL again for larger items as well as household expenses – although online retail dominates BNPL’s purchases – particularly fashion where 1 in 5 online purchases in Australia were paid by BNPL last year – consumers are interested in using it for higher value items such as electrical appliances, appliances and furniture. In addition, about a third of consumers of Australia and the UK indicated that they would use BNPL to pay for everyday expenses such as household bills (38% in Australia34% in the UK), groceries (37% in Australia29% in the UK) and petrol (27% in Australia and the UK).
- Frequent users willing to pay a fee for a great experience – Frequent BNPL users find so much value in using it as a means of payment that 47% of BNPL users in the UK and 49% in Australia say they would still use the provider if a fee was attached.
- Try and buy – a third of consumers worldwide have used BNPL because they wanted to ‘try it out’. Trial is a strong driver of usage in more nascent BNPL markets where dedicated BNPL services have only recently emerged, particularly India (45%), Singapore (43%) and hong kong (40%).
- Young consumers turn to BNPL – There is a clear distinction between BNPL use among Millennials (ages 26-41) and Generation Z (ages 18-24). In mature markets, consumers between the ages of 25 and 34 are proving to be early adopters, with India (74%) and the United States in the lead (61%). In mainland China and India, Gen Z flocked to BNPL with 89% and 73% of consumers under 25, respectively, using the service. In Australia, over 60% of millennials have used BNPL. During this time at hong kongthe greatest adoption has been among consumers between the ages of 45 and 54.
- from Asia baby boomers join GenZ – Surprisingly, research from RFI Global indicates that alongside Gen Z users, there is also strong adoption among baby boomers across Asia who want to test the BNPL trend. 61% of people aged 55-64 and 77% of people over 65 in mainland China – where Ant Check Later and WeChat FenFu are the top 2 brands – compared to 63% (55-64) and 50% ( 65+) in India and 39% (55-64 years old) and 22% (65+ years old) in Singapore.
- Web dominates, but in-store usage is growing – globally, most people use BNPL when shopping online, but there is increasing in-store usage, especially in mainland China (over 50%) and Australia where BNPL is accepted in most stores. Creating a better in-store experience and increasing awareness of acceptance of in-store purchases will be key to increasing the adoption of offline purchases.
About RFI Global
RFI Global is the only global data and information company focusing exclusively on financial services. We provide actionable, evidence-based insights to clients ranging from global and regional banks to FinTechs, advisory firms and regulators in 48 markets, helping them move quickly and confidently from question to action based on the data. RFI Global provides financial industry leaders with local, regional and global insights that identify trends and predict future consumer behavior, sentiment and needs.
The RFI Global BNPL Tracker and Council studies cover 11 countries, surveying nationally representative samples of banked adult consumers every six months. Respondents: 2,000 UK; 1,000 United States; Canada 1000; Australia 2,000; Mainland China 1,000; hong kong 1000; India 1000; Singapore 1000; Mexico 1000; France 1000; Sweden 1,000.
For more information, please contact:
Tel: +44 (0)7990 520390
E-mail: [email protected]
Or Valeria Balaro
E-mail: [email protected]
Standard Chartered “Future Money” survey: 12,000 respondents in 12 markets (hong kong, India, Indonesia, KenyaMainland China, Malaysia, Pakistan, Singapore, Taiwanthe United Arab Emirates, the United Kingdom and the United States) interviewed online between September 25 and October 1, 2020
SOURCE RFI worldwide