Dive Brief:
- Klarna reports a whopping 29.5% increase in buy now, pay later (BNPL) purchases on Black Friday this year compared to last, reflecting the growing popularity of the payment method.
- According to Klarna, top itemsclicked on during Black Friday included food mixers and processors, TVs, soundbars, coffee makers, eReaders, and hard drives.
- A Klarna survey found that 81% of 15,000 respondents found the option to pay for purchases in installments without interest highly useful during the holidays, with 89% of Gen Z shoppers expressing similar sentiments.
Dive Insight:
Klarna processes significantly more Black Friday orders compared to the previous year, experiencing a nearly 30% increase.
BNPL's surge during Black Friday follows a similar trend from the 2022 holiday season, with Adobe analysis showing a 78% spike in BNPL orders and a 81% rise in revenue over the same period. In fact, last year, 10.2% of shoppers bought online purchases for Black Friday using installment payment services, signaling the growing acceptance of BNPL.
Alarmed by the shift in consumer spending patterns, traditional credit card companies might face challenges retaining market share. Wary of credit card debt, nearly half of U.S. consumers remain skeptical about their ability to pay off holiday credit card bills entirely.
The industry's expansion extends beyond the holiday season as BNPL becomes a mainstream payment option. Leading companies in this space, such as Affirm, Klarna, Splitit, and Versatile Credit, employ various strategies to attract consumers and retail partners alike.
In response to the competition, major retailers like Amazon are expanding their installment payment services, offering more choices for consumers looking to manage their budgets. As the BNPL industry continues to evolve, it's expected to penetrate new markets like travel, healthcare, and B2B sectors, cementing its position as a viable alternative to traditional financing options.
- The increase in buy now, pay later (BNPL) purchases during Black Friday, which broadly reflected a 29.5% surge compared to last year, is a sign of the growing popularity of this payment method in 2022.
- Despite traditional finance companies' worries, BNPL is becoming a mainstream financing option not only during holidays but also in the broader scope of business and technology.
- For instance, companies like Affirm, Klarna, Splitit, and Versatile Credit are employing various strategies to attract both consumers and retail partners alike.
- TVs, soundbars, and coffee makers were among the top items clicked on during Black Friday, indicating a significant shift in consumer preferences towards purchasing technology goods.
- In the wake of this shift, AI-driven analytical tools in finance could help traditional finance companies to better understand and adapt to these emerging spending patterns.
- Moving forward, it's expected that the BNPL industry will broadly penetrate new markets like travel, healthcare, and B2B sectors, potentially disrupting traditional financing methods in those areas.
