Take-up of buy now pay later products is moving beyond the young consumers who were early adopters to include older groups, according to new research.
RFI Global has released a report, The Global State of BNPL, which shows the BNPL customer demographic is expanding and consumers are prepared to use BNPL for a wider range of purchases.
Close to a third of BNPL users in Australia and the UK said they would use it to pay for everyday expenses and a significant number in both counties said they would use it to pay for higher value purchases, including electronics, furniture and travel.
Currently, online clothing purchases are the main purchase using BNPL in Australia, the UK and the US.
RFI said that based on consumer responses, growth areas would be in travel, home improvements and medical expenses.
RFI found that 40 per cent of Australian consumers had used a BNPL service at least once, and 30 per cent in the US and the UK have used it. In Hong Kong and Singapore usage levels are 37 per cent and 24 per cent respectively.
“No interest” is the leading reason for using BNPL. Another important factor encouraging take-up is convenience. Older consumers are more likely to say the reason they use it is because the no-interest offer gives them a lower cost replacement for their credit cards.
RFI found there are still barriers to consumer acceptance. Close to half of the consumers surveyed in Australia see it as a form of debt and want to avoid debt.
Another concern is a lack of trust in BNPL providers. RFI said the trusts issue presents an opportunity for banks, which enjoy a higher level of trust with consumers, to offer their own BNPL products or partner with BNPL companies.
RFI said that for BNPL to have greater penetration in the in-store market, providers will have to do more work to provide a quick and easy checkout experience, such as offering virtual cards in mobile wallets.
On the merchant side, BNPL providers could win greater acceptance by cutting fees, which are seen by many merchants as high.
Merchants that accept BNPL report similar benefits to the ones they get from offering credit cards, including increased purchase size, greater customer acquisition and a higher frequency of purchases.