During the 2023 holiday season, Americans made more than $17 billion in purchases using buy now, pay later. Vivek Pandya, principal analyst at Adobe Digital Insights, joined TheStreet to discuss why “buy now, pay later” purchases are becoming increasingly popular, as well as what types of items consumers are purchasing with BNPL.
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Full video transcript below:
JD DURKIN: Lately we have seen how purchases with the 'buy now and pay later' method skyrocket. It is very popular to use that payment method. What is behind the increase?
VIVEK PANDYA: Well, there are a couple of different reasons why we are seeing this increase. So during the buy now, pay later holiday season, we saw about $17 billion in spending, and that's almost $75 billion for the entire year. And this is actually because consumers are in a more strained financial position and then they see sort of an interest-free way to purchase goods, especially for things like the holiday season. And then be tempted to do it. And we're also seeing integrations into a lot of different mobile apps, a lot of different retail endpoints to support “buy now, pay later,” especially at a time when consumers are looking to buy different things. Buy items with higher tickets, but then break them down into installment payments.
JD DURKIN: And which categories are seeing the biggest increase in “buy now.” Pay for subsequent purchases? Are you seeing similar trends of people using that?
VIVEK PANDYA: Surprisingly, we have seen increases in categories like electronics and clothing, but also in groceries. Therefore, there are many increases in the most important items. And when you think about things like groceries, those prices continue to go up, even though the growth of those price increases has slowed quite a bit. We continue to see that food prices are quite high. And then when consumers buy groceries online, they're really trying to achieve efficiencies in shipping and things like that. Then suddenly your grocery order can be about $500. Then, all of a sudden, they start leaning toward “buy now, pay later.”
