It is perhaps unsurprising that in one of Fintech’s largest years to date, data from Black Friday sales demonstrated that buy now, pay later services are proving to be a highly popular payment method among sale shoppers.
Also known as point-of-sale financing, buy now pay later (BNPL) transactions increased by 56% in overall number of transactions on Black Friday compared with last year. This data was collated from payment services provider Mollie, looking into 101,000 merchants across Europe. According to Business Insider, Afterpay, Quadpay, and Sezzle added record numbers of new customers and saw triple-digit growth year-over-year in November. Conversely, Black Friday in-store foot traffic fell by 54% this year. With BNPL players simultaneously witnessing a volume rise of 22% this year. BNPL has become a must have for retailers – especially online.
Speaking on this Ken Serdons, Chief Commercial Officer at Mollie said, “It makes sense that fintechs like Klarna, who have performed phenomenally well this year, have been so popular this Black Friday. The increase is in-line with this growing trend towards more flexibility in how consumers pay for goods.” As a result, BNPL companies have been enjoying growth this year with Sezzle’s active consumer base reaching 2 million at a 151% year-over-year growth, while Afterpay’s shop directory delivered consumer traffic of 1.2 million in the U.S. and 1.9 million globally at a 154% year-over-year increase.
Despite BNPL services rapidly rising in popularity, they still only represent 2.5% of transactions, up from 1% from 2019. This highlights an area of growth for BNPL companies and an opportunity for merchants to increase sales. For merchants, the potential to increase basket size and average order value is likely to be an incentive to partner with BNPL providers. Another incentive is appealing to the millennial and Gen-Z consumers who prefer BNPL over traditional credit cards. Not offering a BNPL service could be the difference between winning or losing a sale with this cohort.
However, this growth does not come without risk. Mollie’s research also revealed that over half of the 18-34-year-olds who used BNPL have missed a payment. Additionally, nearly two thirds shared that the method encourages them to spend more which increases their likelihood of getting into debt.
Nevertheless, it seems that this method is here to stay, and will become increasingly popular during the holiday season and beyond.