“This growth was driven partly by the impacts of the pandemic in terms of financial strain and attitudinal changes towards BNPL and partly by our interest-free plans launched in that year,” says Andy Kerr, Boxt founder and CEO. Its interest-free offering, available to repay over 12 to 24 months, has doubled in popularity since it started in 2017 and accounts for 40% of total business. “My bet is that the impending recession will lead to an increased reliance on BNPL among consumers generally, potentially more so for certain non-retail purchases,” says Gavin. “It’s a relatively easy choice for someone to avoid taking on debt to buy a pair of trainers, but not so easy to avoid funding necessities like car repairs or medical care when you don’t have the money readily available.”īoiler and air-conditioning supplier Boxt offers various credit options at checkout through the white-label checkout solution Divido. With budgets tightening, sudden and unseen expenditures become more damaging to finances, leading to consumers accessing BNPL services for transactions such as house or car repairs. The impact of recession on shopping habitsĮven with such offers, the likelihood of a global recession means many will have to reprioritise spending. Reyes Vega believes this will allow sales to “grow despite the current economic situation”.
We partner in campaigns and use up-funnel marketing to reach our customers more effectively,” he says. Later this year, AeroMexico will implement a 0% APR offer and a ‘fly now, pay later Estimator tool’ through Uplift. Reyes Vega reports that revenue generated through Uplift has more than doubled in 2022 and customers using BNPL are 25% more likely to return. “We view Uplift as not just a payment option but as a marketing and revenue-generating tool. “When we started conversations, five years ago, very few merchants in retail or any other industry were offering this product.” “Implementing BNPL was part of our payments evolution, to offer our customers more comprehensive payment options,” says Daniel Reyes Vega, director of digital solutions at AeroMexico. Customers have the option to purchase with no upfront cost, and then select a repayment plan for up to 12 months. AeroMexico uses specialist travel BNPL provider Uplift’s services at checkout. While there has recently been an increase in adoption over the past 12 months, BNPL for travel is not a wholly new phenomenon. “Particularly as the current squeeze on disposable incomes is likely to restrict customers’ ability to pay upfront for high-value trips.” “The travel industry has a strong use case for BNPL and providers have quickly latched on to it to increase conversion rates and average spend per customer,” says Gavin. Three-quarters of those who took part in the survey were open to using BNPL to fund their holidays.
A study by travel technology firm Amadeus revealed that travel was the highest priority for consumers’ discretionary spending over the next 12 months. Some 42% of respondents listed foreign travel as a high priority, with a further 32% expressing interest in domestic holidays, eclipsing eating out, home improvements or big-ticket items such as a new car.
Even with a bleak economic outlook, interest in travelling remains strong. This could partly be due to the effect of the pandemic on consumer priorities. The rise of BNPL as consumers’ preferred payment method will lead to more non-retail businesses touting it as an option at checkout National Express recently announced a partnership with Clearpay, while and now offer Klarna at checkout. Travel and hospitality in particular have seen adoption levels increase. “The rise of BNPL as a preferred payment method will lead to more non-retail businesses touting it as an option at checkout,” says Amy Gavin, lead competitor strategist at fintech consultancy 11:FS. Familiarity with BNPL – it’s estimated 17 million Britons have used such services – means that other industries are now offering the payment option at checkout. While this type of credit has so far been associated with low-cost retail purchases, it is becoming popular for high-cost expenditures such as car repair or holidays. Customers can now use buy-now-pay-later services for non-retail purchases, such as holidaysĭespite reports that the use of buy now, pay later (BNPL) is beginning to slow, new research reveals consumers are continuing to access credit at the point of purchase.Īccording to Barclays Bank and debt management charity StepChange, the average BNPL user was paying off 4.8 purchases in June 2022 – almost double the estimate in a similar study conducted in February (2.6 purchases per customer).
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