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BNPL Powers Holiday Shopping
Break Now, Panic Later // Image by Kait Cunniff with DALL-E
BNPL (Buy Now, Pay Later) platforms like Klarna, Afterpay, and Affirm drove increased spending this holiday season… even as Americans struggle to pay the bills.
Why It Checks Out: Despite the average American feeling a major budget crunch, they’re still spending a record amount on gifts. BNPL products psychologically make it feel like you’re paying less, so Americans are increasingly turning to the financing model to afford the things they want (and often need) without taking on more credit card debt — especially as job prospects dim and wage growth stagnates.
Between The Purchases: Over 91 million Americans are using BNPL services… and that’s reshaping what was under Christmas trees this year.
A Morgan Stanley study found that BNPL purchases now account for 6% of all online transactions — fueled by retailers like Amazon, Sephora, and UNIQLO offering it as a payment option at checkout (sometimes with discounts).
In November — the month of Black Friday and Cyber Monday, of course — 25% of Americans used a BNPL service. That’s a 6% increase from last year.
On Cyber Monday alone, BNPL receipts totaled over $1 billion — 7% of all purchases that day.
Final Receipt: That said, there’s a darker underbelly to BNPL — people are now relying on it for their everyday expenses. Bloomberg reports that groceries rank among the top five purchases for which people use the services, and a recent LendingTree survey found that 41% of users have been late on a payment (up from 34% last year). Ironically, those making over $100,000 per year are more likely to miss payments than those who make $30,000, potentially a sign that even those with six-figure incomes are struggling to keep up with rising prices.
Next Order: With young people’s expenses made up of countless monthly subscriptions, paying for things piecemeal may soon become the primary way consumers under a certain age can afford anything. Better start becoming an Excel pro to keep up with it all.
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Today’s email was written by David Vendrell.
Edited by Nick Comney. Polled and Copy-edited by Kait Cunniff.
Published by Darline Salazar.