As inflation continues its squeeze on American consumers, a recent study, commissioned by Sunbit and conducted online by the Harris Poll with more than 2,000 US adults, shows that the majority of consumers would like BNPL to go beyond its current focus on e-commerce businesses and extend to everyday needs.
BNPL for necessities is a must-have
Most consumers can’t cover an unexpected $400 expense, and having access to the right financing tools is essential to meeting the needs of consumers. 69 per cent of US consumers report an interest in BNPL to pay for necessary services such as car repairs, eyewear or dental care. Those who are feeling stressed by the current economic situation are more likely than those who are not stressed by it to say they want access to a BNPL option for these services (74 per cent vs. 53 per cent).
But financing options aren’t only for consumers in a pinch. According to the survey’s findings, those with an annual household income of $100,000+ are more likely than those with an annual household income of less than $75k to say they are very likely to finance a necessary service in the next 6 months (18 per cent vs. 11 per cent).
In keeping with other findings in the survey, Boomers are the least likely to be interested in BNPL for necessary services (52 per cent vs. 72 per cent of Gen Z, 84 per cent of Millennials, and 72 per cent of Gen X), while Millennials are most likely to express interest in BNPL for necessary services.
Everyday needs are being put off
Current inflation is negatively impacting about eight out of 10 US consumers, and 81 per cent cite feelings of diminished buying power as a result. A similar proportion of US consumers (79 per cent) plan to cut back on ‘wants’ to better save funds for necessities over the coming months in anticipation of prices of goods/services continuing to rise.
More than two-thirds of US consumers (67 per cent) have delayed necessary services and purchases due to inflation.
The top items being delayed include home repairs (27 per cent), dental work (27 per cent), car purchases (26 per cent), and car repairs (20 per cent), pointing toward a need for solutions to help consumers address these necessities.
Consumers appear to expect the economic outlook to remain challenging, with half of US consumers (50 per cent) planning to finance a necessary service over the next 6 months.
Consumers reveal their feelings about BNPL
While it is less surprising that 92 per cent of US consumers have at least heard of BNPL, and nearly three-quarters (73 per cent) are at least somewhat familiar with it, the study was able to get an inside look at the emotional impact BNPL usage has had on consumers.
Sunbit learned that those who have used a BNPL service in the past have very positive feelings about the experience, whether they used BNPL for discretionary or nondiscretionary purchases. Many of those who have used BNPL for necessities report feelings of happiness (47 per cent), relief (63 per cent), and excitement (39 per cent), while only 10 per cent report feelings of regret or stress. Similarly, many of those who have used BNPL for non-necessities report feelings of happiness (53 per cent), relief (43 per cent), and excitement (32 per cent), while only about one in 10 report feelings of regret (11 per cent), stress (12 per cent), or guilt (nine per cent).
Moreover, most US consumers who have used BNPL (76 per cent) have used it more than once and on average have completed five transactions with it.
BNPL is likely to evolve
The study outcomes point to a broad range of consumers’ use of BNPL as part of financial management, spanning the gamut from those under economic pressure to those who choose to use it as a budgeting tool or just another option in their financial toolkit. Consumers have been drawn to BNPL as a faster, cheaper alternative to credit cards. As with any category, as BNPL matures, customers may evolve in the way they use it. The Sunbit study suggests that consumers may be gravitating toward using BNPL as a means of reducing stress for everyday purchases and at the point of sale – and to avoid endless cycles of debt. Whatever the nuances, the current data points to the idea that BNPL is here to stay.