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Earnings Show Consumers Using BNPL for Clothes, Travel

Earnings season is not over yet, and the picture for consumer spending is mixed so far.

Payment networks and banks have noted that although consumers are still using their cards, there have been some declines by lower-income households. the Federal Reserve‘s Latest Consumer Credit Survey He explained that the use of revolving debt — which includes credit cards — slowed to an annual pace of 0.1% in March, down from a rate of more than 9% the previous month.

Spending can and often is lumpy, and total revolving debt in the first quarter grew 5.7%. But that’s lower than the 7.5% rate in the fourth quarter of 2023, and much lower than the 9.7% annual rate calculated a year ago.

For buy now, pay later (BNPL) providers, pockets of significant growth are emerging, lifting the fortunes of publicly traded companies and providing evidence — consistent with PYMNTS Intelligence’s own data — of acceleration in key categories like apparel and travel.

enter into profits, PYMNTS Intelligence, in collaboration with Splititfound that three out of five consumers said they used some split payment option at least once in the past year.

For more details, surveys indicate that 37% of consumers have used BNPL. More than a third of low-income consumers have chosen BNPL, a share that increases the higher the income bracket.

Split payments

Those who tried it loved it. PYMNTS/intelligenceSplit It found that 79% of consumers had a positive experience with the product.

In terms of what they were buying, the chart below indicates that more than a third of consumers using installment plans used BNPL to buy clothing and accessories, 18% did so with groceries and more than 14% chose BNPL when paying for travel-related services.

Most common purchases, installment payments

According to the chart below, which uses data from this spring based on surveys conducted with about 2,000 consumers across three main categories, more than 3% of consumers used BNPL to pay for travel as their most recent transaction, and a much smaller percentage did so and so on in other categories. Listed is a long permission to accredit BNPL.

Transaction share, BNPL

Earnings growth

Earnings season confirms the accumulated momentum.

In Block’s first quarter report, Management noted that BNPL’s gross merchandise value (GMV) reached $6.98 billion in the first quarter, up 25% year-over-year.

Separately, on Wednesday (May 8), Confirmation of third quarter financial results It revealed 51% growth in revenue to $576 million, as well as 4.7 transactions per average user (up 25% year-over-year), indicating a hold on the installed base. Confirmation also provides a quarterly update of spending categories. In the latest reading, spending on general merchandise rose by 49%, fashion and beauty by 17%, and travel and ticket booking grew by 35%.

Sizzle a reportjust after the bell On Wednesday, he said total income was up 35%. Core business sales rose 33.2% to $492.7 million year over year, while consumer purchase frequency increased to 4.5 times last quarter, up from 3.1 a year ago, the company said in its earnings release.

In the current environment, higher card interest rates and the aforementioned slowdown in “traditional” revolving credit debt may serve as an additional incentive for BNPL adoption.

At the end of 2023, About a third of consumers living paycheck to paycheck said they used BNPL, according to PYMNTS INTELLIGENCE. In addition, 30% of survey respondents indicated that low or non-existent interest rates contributed to their decision to apply for a BNPL. Nearly 19.4% appreciated the fact that BNPL options do not require a strict credit check. For the 10% of the population who use BNPL, consumers said they would not be able to cover bills if BNPL was not on offer.

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