US Consumers are Increasingly Using BNPL as Cost of Living Increases

As the cost of goods and services increase in the US, Americans want more buffer, flexibility, and control over their cash flow than ever before. Already, buy now, pay later (BNPL) is no longer just used by consumers to purchase the latest shoes and trendy clothes. More and more, consumers are turning to BNPL for everyday purchases.

58 percent of US workers are concerned that their paychecks are not keeping up with the increasing cost of living. No matter how you look at it, consumers are looking for solutions to help them navigate growing financial pressure. BNPL is a financial tool that helps individuals get what they need when they need it by breaking down large, upfront price tags into manageable installments. It gives consumers the option to extend their cash reserves to purchase everyday products, ease financial stress, and navigate economic uncertainties. 

This is an opportunity for banks and credit unions, which have been a source of education and support for their cardholders and their financial health, to answer that call. 

Extending true financial flexibility through BNPL

BNPL is no longer “nice to have” for their cardholders, but a necessary tool to increase flexibility in cash flow. As the cost of household goods and essentials increased 50 percent due to inflation and 64 percent of Americans reported to be already living from paycheck to paycheck, a new BNPL trend has emerged. US consumers are increasingly leveraging BNPL as an accessible form of cash flow during emergencies, and now during everyday use in tighter economic conditions.

This shift is already noticeable in purchasing behavior. On Prime Day this year, eMarketer shows that purchases included more everyday and household products like FritoLay variety packs and toilet paper. Meanwhile, BNPL has become a staple payment method for these shopping events and purchases. Consumers with traditional credit cards can use it for greater financial flexibility, but this is not available today for debit card users. 

BNPL by financial institutions can provide this additional tool to their debit cardholders through a payment habit they have already developed to better navigate financial uncertainty. Banks and credit unions have the most accurate picture of their cardholders’ current financial standing - leading them to be the ideal provider for a BNPL solution that can truly bring financial flexibility instead of creating more financial burden.

More benefits of BNPL powered by a financial institution

BNPL is no longer a bonus, but a necessity. When powered by financial institutions, BNPL offers can be extended based on account history like direct deposits and historical balances instead of relying on metadata and soft credit pulls. This is particularly helpful for those who are using BNPL due to an aversion to traditional credit products or a lack of access to it, but instead have a strong deposit account history. BNPL offered by financial institutions also align with the regulatory frameworks designed for consumer protection, which banks and credit unions already adhere to.

Having everything BNPL within the banking app also means that cardholders can have clear visibility to their financial status and know that the full picture is being taken into consideration before a BNPL offer is extended to them. Cardholders also have the convenience of accessing a single source of truth without moving to one or more third-party applications.

Toward financial flexibility and beyond

56 percent of American adults used BNPL services in 2021. For many, it is an integral tool. Here are some ways financial institutions can start gauging cardholder need for more financial flexibility: 

1. Add BNPL as a line item in your budging tools. Many of your cardholders are already using BNPL. Help them (and you) see how much, and help them account for BNPL in their budgeting tools.
2. Create solutions that can relieve financial pressure including BNPL loans, but also incentives to manage healthy cash flow, and retailer discounts from community partnerships.
3. Educate your cardholders on how to engage with BNPL in a way that doesn’t increase financial burden down the line. 

Ready to chat about how to do just that? Contact us today!