Samsung Splitit In-Store Payments Partnership
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Buy Now, Pay later (BNPL) services have revolutionized online shopping, offering consumers flexible payment options that boost conversion rates, increase average order values, and meet evolving point-of-sale expectations. Tho, recent research indicates that BNPL is encountering meaningful headwinds when it comes to brick-and-mortar retail environments.
The In-Store BNPL Disconnect
Data compiled by PYMNTS Intelligence following the last Black Friday revealed a stark contrast between online and in-store BNPL adoption.While BNPL accounted for 10.1% of online transactions during the busy shopping period, its presence in physical stores was considerably lower, making up only 7.4% of in-store purchases.
This disparity suggests a growing consumer preference for BNPL in digital spaces, with physical retail presenting a different set of challenges. As PYMNTS noted,”Consumer sentiment hints at the fact that BNPL is facing headwinds in store.” The research further highlighted the potential impact of BNPL’s absence in brick-and-mortar settings. If BNPL options were unavailable, a notable 21% of in-store shoppers indicated they would still proceed with the purchase, while 13.6% would opt for a less expensive product.
In contrast, the impact of BNPL unavailability was less pronounced for online shoppers. only 16.6% of online consumers stated they would still buy the item, and 9.9% would choose a cheaper option.More considerably,12% of digital shoppers reported they would abandon the purchase altogether if BNPL wasn’t an option,compared to a smaller 7.9% of in-store shoppers who would do the same. This suggests that while BNPL is a strong motivator online, its absence in physical stores doesn’t necessarily lead to lost sales to the same degree.
Understanding Consumer Behavior in the Absence of BNPL
The differing responses between online and in-store shoppers when BNPL is unavailable underscore a key difference in how consumers approach purchases in these distinct environments. in-Store Adaptability: A significant portion of in-store shoppers demonstrate a willingness to adapt. The fact that over a fifth would still buy the item, even without BNPL, points to a potential reliance on other payment methods or a stronger immediate desire for the product.The inclination to switch to a cheaper product also indicates price sensitivity, but not necessarily a complete abandonment of the shopping mission.
Online Purchase Commitment: Online shoppers, however, appear to have a higher level of commitment tied to the BNPL option. The larger percentage who would still purchase or opt for a cheaper item, coupled with a higher rate of outright purchase abandonment, suggests that BNPL plays a more critical role in facilitating the final click for many online consumers.
The Rise of Installment Payments: A Credit Card Evolution
Beyond the BNPL discussion, a recent PYMNTS collaboration with Splitit, detailed in the report “Managing Unplanned Expenses: How The Pay Later Economy Fits Consumer Needs,” sheds light on broader consumer payment preferences, particularly for unexpected or impulse purchases.The study revealed that over a third of consumers had faced an emergency expense of at least $250 in the prior year. Similarly, the same proportion of consumers made a comparable impulse purchase within the last three months. These unplanned expenditures often exceed readily available cash,making the chosen payment method crucial.
Credit Cards Lead the Way for Unplanned Spending
When faced with these significant, unplanned expenses, consumers overwhelmingly turned to credit. Credit cards emerged as the dominant payment method, utilized for 35% of impulse buys and 33% of emergency expenses.
However, within the realm of credit card usage for these large, unplanned purchases, a significant trend is the growing appeal of installment plans.Rather than simply revolving the balance, a considerable share of consumers are opting to pay off these purchases over time through a set number of installments. While 48% of consumers who used a credit card for their latest impulse purchase chose to pay it off in full, a compelling 30% opted for installment plans. This indicates a clear consumer desire for payment flexibility,even when using customary credit products.
This preference for installments, whether through dedicated BNPL services or credit card features, highlights a fundamental shift in consumer expectations. as the pay-later economy continues to mature,understanding these evolving needs will be critical for both merchants and financial