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September 9, 2021Blog Posts

As ‘buy now, pay later’ surges, a third of U.S. users fall behind on payments

Reuters

A third of U.S. consumers who used “buy now, pay later” services have fallen behind on one or more payments, and 72% of those said their credit score declined, a new study published by personal finance company Credit Karma showed.

The study, conducted by software firm Qualtrics, surveyed 1,044 adult consumers in the United States last month to measure their interest in buy now pay later (BNPL) and found 44% had used these services before.

The usage figure was slightly up from a similar survey conducted by Credit Karma for Reuters in December, while missed payments was down from 38%.

The latest survey found younger consumers were more likely to miss payments. More than half of Gen Z or millennial respondents– those born between the early 1980s and mid-to-late 1990s– said they had missed at least one payment. That compares with 22% of Gen X, who were born in the early 1960s to early 1980s, and 10% of Baby Boomers, those born between the mid-1940s and 1980.

There has been a surge in usage of BNPL services, which allow consumers to easily split payments for purchases into installments. The boom in volumes by providers such as Klarna, Affirm Holdings, AfterPay Ltd and PayPal Holdings Inc, has been driven in part by online shopping growth during the coronavirus pandemic.

Source

New research from The Strawhecker Group analyzes key trends and consumer attitudes.

Download a free infographic covering several findings from the full report.

Consumers have increasingly adopted Buy Now, Pay Later (BNPL) services for multiple reasons; a desire for financial flexibility, a way to avoid incurring credit card debt, or to purchase items outside of their budgets. However, despite its popularity, consumer debt and missed payments have led to calls for additional research and regulation. Read the press release.

To take a closer look, The Strawhecker Group (TSG) conducted a survey of over 1,500 U.S. consumers in early 2021 with the goal of understanding domestic attitudes and perspectives on the use of BNPL services. The complete findings, a selection of BNPL provider profiles, and market landscape details can be found in the firm’s new report Buy Now, Pay Later: An Analysis of Key Trends and Consumer Attitudes.

Highlights of this extensive 81-page report include:

  • Buy Now, Pay Later Background
  • Key Players in the Buy Now, Pay Later Space
  • Buy Now, Pay Later Consumer Survey
  • Concluding Thoughts: The Future of Buy Now, Pay Later
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