New research suggests buy now, pay later users may not be shunning traditional retail credit products in favor of the installment-payment option. That’s one finding from TransUnion LLC’s “Understanding the Evolving Point-of-Sale” report released Thursday.
The data show that 76% of the point-of-sale financing applicants had a retail card in their wallets at the time of application compared with 66% of the general credit population, the report indicates, which surveyed nearly 1,000 BNPL users.
“We also found that a larger portion of POS financing applicants were building retail card balances as compared to the general credit active population,” Liz Pagel, TransUnion senior vice president of consumer lending, says in an email to Digital Transactions News. “Consumers who had applied for a POS loan were also more likely to open a new retail card in the six months post application.”
The credit activity of POS financing applicants was a bit of a surprise, Pagel says. “We were surprised to see how credit-active these consumers are,” she says. “More POS financing applicants are building bank and retail card balances than the general credit population versus using POS financing instead of using their cards.” Continuing, “These new forms of financing are growing the credit pie—opening up more opportunities for both consumers and lenders.”
Other data show that budget is the main reason consumers choose the BNPL option, with 38% citing it, followed by convenience, 26%, avoiding interest rates or minimized credit impact, 20%, and it provides access to products, 14%.