Buy Now Pay Later – it’s role in supporting Christmas shopping

Mark Hirst

The growth in online point of purchase ‘Buy Now Pay Later’ (BNPL) offers has been the subject of a number of recent media articles and we at Harris Interactive, in partnership with This is Money, decided we’d take a look at the subject. We were keen to get feedback from consumers and their use of this type of payment facility as part of their Christmas 2019 shopping activity.

Earlier in January we ran a nationally representative survey on our Harris 24 solution with 1073 adults aged 18+ that explored this subject and the resulting article can be viewed here: Could buy now pay later and Klarna kill the credit card.

The article reviews many of the areas we investigated. Below are a few of areas that stood out to the Financial Services team here at Harris Interactive.

Firstly, we were able to quantify which credit methods people were using to fund their Christmas online shopping:

It is clear to see that whilst traditional credit and payment options lead the way, the new BNPL methods have quickly established themselves in consumer awareness and their behaviours.

Secondly, we looked to see what items people were purchasing, particularly those using BNPL facilities:

Whilst BNPL facilities are used across a wide range of goods, it does appear to be particularly popular in clothing & shoes as well as smartphones and jewellery. Some of the verbatim we captured may explain why this is and how they see the facility help them manage their Christmas outgoings:

Next we investigated people’s understanding of the impact of using BNPL facilities on their credit rating. Looking at those who state that they struggle to pay existing debt, 45% said that they agreed using BNPL would negatively affect their rating but also:-

This does indicate that a notable minority of people do not fully understand the consequences of using these payment methods and that further communication may be required.

Lastly, we want to highlight how this form of payment is becoming a consumer requirement:

It would seem that once people have experienced using this type of facility, they are likely to see it as a key component of their future online shopping experience.

So in summary, looking across all the data we captured there are some key lessons for retailers/ organisations that currently offer these facilities and the wider financial services industry:

  • BNPL payment options are becoming increasingly popular and will have helped many consumers manage their Christmas outgoings.
  • Retailers who don’t offer buy now/pay later options may risk losing customers
  • Providers have a duty to help consumers avoid any unintended consequences of using by ensuring the potential costs and risks of not keeping up with repayments are clearly communicated.
  • Helping consumers make informed choices about their payments may help retailers differentiate themselves and the purchase experience

Please do contact us if you are interested in conducting similar research or would like to discuss our findings on BNPL in more detail.