Meet Your Customers: The Faces of BNPL

Welcome back to The Gateway to Growth!

October’s Amazon Prime Day has come and gone, and if you haven’t already hit the financial tollbooth for your holiday wish lists, you're likely approaching it. As discussed in last month’s newsletter: we’re all going to spend—and probably more than we intended.?

With that reality weighing on all of us, perhaps now more than ever it is a bit easier to understand what leads a customer towards financing. But really who are these customers? And how can you better serve them?

1. BNPL Customers Want a Choice

With more flexibility and payment options on the market than ever before, it's becoming increasingly clear that people want choice. No one likes being backed into a wall– especially so when they’re already facing inevitable expenses.

And while our technology provides a readily available solution to all customers at checkout- realistically we don't expect that every customer chooses this as their preferred option. And that’s okay.

But while BNPL isn’t for everyone, it certainly is for some. And that “some” has a lot more power than you might think. Adobe Analytics projects an expected $18.5B in U.S. BNPL usage in the last quarter of the year alone.?

2. Your BNPL Customers Are Not the Same as Your Credit Card Customers

A common concern we encounter as a BNPL technology company is the fear that our service will cannibalize credit card sales. However, it’s important to recognize that customers who prefer to pay with credit cards will do so regardless.

The key here is that not all customers want to pay with a credit card all the time. In fact, 71% of BNPL users had credit card debt in 2023 (Federal Reserve Bank of Boston). Customers may choose BNPL options over fear of accruing interest with no end in sight.

Ultimately, if a customer is hesitant to use credit, they won't do so—regardless of the circumstances. The critical factor is whether you provide an alternative payment option, as this can make the difference between completing a sale and losing it.

On top of this, 70% of consumers report the availability of their preferred payment method as being a significant factor in their transaction. So making sure to offer BNPL customers an option to pay their way can statistically be a make or break at your checkout.?

3. BNPL Customers are Real People With Real Needs

Another common misconception we face is criticism that the BNPL industry encourages exorbitant spending in customers that are not as equipped to pay. You might’ve even thought that after reading the last section in this very newsletter.

And our response to this is that like all other payment options, including credit cards, we are a tool for customers. While it is true that 71% of BNPL users have credit card debt from month to month, it is important to recognize that debt is situational. According to data from Payments Dive,

In Q4 of 2023, 60% of BNPL customers reported having experienced some sort of disruption in the past year, whether it be a natural disaster, loss of government benefits, etc. That statistic was 12% higher for BNPL users than non-BNPL users.

Finances aren’t always black and white and offering a BNPL checkout might save someone from having to choose between keeping the lights on and fulfilling their child’s gift list this holiday season.??

The beauty in a system like BNPL is that it gives your customers the space to be human, not just statistics. These are real shoppers with real stories, real struggles, and a legitimate desire to make purchases without digging themselves deeper into financial distress.

4. Your BNPL Shoppers are Willing to Pay

And they do pay. The majority (78%) of BNPL users made their payments on time in Q4 2023, up from 71.7% a year prior. While 17.6% of respondents said they were late on some of their payments in the fourth quarter of last year, only 4.5% were reported for not making any payments, the survey found. Both figures improved from a year ago.?

*Note that delinquency rates of credit cards are relatively comparable, coming in just slightly lower.

5. Your BNPL Shopper According to WeGetFinancing Data

Last but certainly not least, your BNPL customer is ever changing. Current WeGetFinancing data for the month of October reflects the following:

In the past month alone, our average BNPL customer:

• Received a loan for an average order amount of $5160
• Had an average FICO of 633
• Was an average age of 50 years old
• Had an average annual income of almost $88,000

Painting the Picture

So you might’ve come into this newsletter knowing that BNPL customers like choices. But now you know who and why. Oftentimes, these are customers that are hesitant to charge another purchase to their credit cards. They’ve likely experienced some sort of disruption in the past year that may have affected their finances– perhaps even their FICO. These customers are real people with real needs and a very real willingness to pay.?

These are not necessarily customers that have a low annual income or fit into just one age or FICO category.?

Now if this wasn’t what you expected, take a moment and consider the payment options you’ve offered your customers in the past– because without a financing partner like WeGetFinancing, you’re likely not catering to the average BNPL customer. Cut yourself a piece of the $18.5B pie in purchases that BNPL customers are expected to make in this upcoming quarter. It's a sure fire, minimal effort way to expand your sales and please more customers.

Newsletter curated by Carissa Civitello, Operations Manager at WeGetFinancing.

For more information on WeGetFinancing and what it can add to your business, please visit our new website.

Missed our last edition? Get caught up by reading Decking the Halls Early: Lower Interest Rates and Extended Holiday Shopping.