The Absence of Interest Charges Is What Tweaks Consumer Interest in BNPL Services

The buy now, pay later trend continues to solidify into a permanent part of the payments arena, thanks to consumers who readily adopt the installment-payment service. Now, new research finds that many—82%—are drawn to it because they do not have to pay interest for the installment-payment benefit.

New research from The Strawhecker Group, an Omaha, Neb.-based payments-research firm, concludes that the absence of interest charges is the top draw for consumers to a BNPL plan. Other top five features are: an easy return policy, 80%; no late fees, 76%; a short application process, 75%; and the availability of an app, 65%. These and other drivers provide consumers with incentives to try a BNPL service. 

“To some extent, a lot of customers have experimented with BNPL,” Sheridan Trent, a Strawhecker senior research analyst, tells Digital Transactions News. “Consumers are fairly willing to shop around and find the solution they like the best.” In 2021, 51% of those surveyed had tried just one BNPL plan, but in 2022 that has shrunk to 45%.

Another telling indicator of the solidification of BNPL services is that the percentage of consumers who responded with “absolutely, yes,” they would use a BNPL product again increased to 60% in 2022, compared with 46% in 2021. The percentage of those who responded with “maybe” decreased to 8% this year from 12% last year.

These results—548 U.S. consumers were surveyed from Feb. 16 through March 3—are useful to payments providers. “For acquirers, this is good to keep in mind so they can more effectively tailor their solutions and make them attractive,” Trent says. Acquirers will want to ensure their BNPL products have the features consumers are going to care about, she says.

BNPL services had their start in online purchases, where 93% said they made at least one purchase with a BNPL plan, and many have added in-store acceptance. But consumers have been less willing to use BNPL there. Only 39% said they had made at least one BNPL purchase in a physical store.