Online purchases using the BNPL rose by 13% year-on-year in November, according to Adobe Analytics. That figure does not take into account Thanksgiving or Black Friday spending. “In an uncertain economic environment, a more cautious consumer is embracing more flexible ways to manage their budget,” Adobe ADBE, the software and market-research company, said in a report Friday.
This form of online layaway purchases has proved popular in Europe and recently found acceptance in the U.S. for everything from Peloton equipment to household appliances. “Buy now, pay later” offers a new spin on the concept of layaway, which has become increasingly popular among younger, cash-strapped consumers. It allows consumers to split purchases into installments and charging them either simple interest or no interest at all, in a break from the traditional credit model that lets interest compound.
“BNPL allows consumers to split purchases into installments and charging them either simple interest or no interest at all, in a break from the traditional credit model that lets interest compound. ”
Unlike with traditional layaway, however, consumers receive instant access to their purchase as they pay it off. Furniture companies, for instance, have long allowed people to pay for big-ticket items in installments while taking the product home right away, but now the concept has made its way online, spreading across industries and into smaller purchase amounts. An increasing number of younger people and those living paycheck to paycheck are relying on BNPL, and other alternative forms of payment, experts say. About half of younger people — millennials and Generation Z — said they are highly likely to finance at least one of their holiday purchases. Shoppers are financing even lower-priced gifts using BNPL. The average order value of those BNPL deals over Thanksgiving fell by 6%, according to the separate data released by Salesforce on Friday. Salesforce expects BNPL usage to “ramp up with the big shopping days” — namely, Black Friday and Cyber Monday. “One of the worst things consumers can do is finance gifts on a credit card that they don’t intend to pay off at the end of the month, especially in a rising interest-rate environment,” said Anuj Nayar, financial health officer at LendingClub, a financial services company based in San Francisco, Ca …