Credit report

Report: 80% of US shoppers use buy now, pay later to avoid credit card debt

Diving brief:

  • Following previous reports on increasing adoption of digital payments, the Experian Global Insights report found that 62% of respondents said they use mobile wallets and 63% use traditional payment methods, the credit reporting agency announced on Thursday.
  • More than half of respondents (53%) said they have spent more online in the past three months, and half said they are likely to increase their online spending in the next three months.
  • Fifty-seven percent of respondents said that using buy-it-now and pay-later services could replace their credit card. But only 18% of respondents said they had ever used paid services later in the past six months. Eighty percent of US consumers said they use digital installment payment services to avoid credit card debt.

Overview of the dive:

Experian’s international survey of 6,000 consumers and 2,000 businesses suggests that offering a range of effective payment options is key to attracting customers. The report found that most respondents (81%) said a positive digital experience gives them a more favorable view of the brand than a physical store experience.

However, 23% of respondents said their expectations for digital experiences were only partially or not met, compared to 30% of consumers who said the same in 2021, according to Experian research.

“The results of our latest survey reveal that many consumers are more concerned today about the security of their online transactions and activities than they were a year ago, with regional differences in the nature of their main concerns,” said David Bernard, executive vice president of Experian. strategy and operations for global business intelligence, said in a statement. “The past two years have given way to a digital savvy consumer, who [has] growing awareness and understanding of advanced and frictionless security methods. Consumers are looking to make their jobs and lives easier and safer.”

Experian’s report follows other research indicating that the digital payment industry is growing. According to a Finaria report published last year, the mobile wallet industry is expected to reach $3.5 trillion by 2023, and the average transaction value could increase by 22% to $2,051. More, 2021 PayPal and BigCommerce Research found that more than a third (35.2%) of survey respondents said they preferred using digital wallets, up from 28.3% before March 2020.

As more consumers seek out contactless payments during the pandemic, mobile POS shipments are expected to grow 56% globally, to 32 million units, by 2026. according to Juniper Research.

In response to the rise in demand for digital payment, more and more businesses are planning to offer multiple payment options to appeal to their customers. A Visa survey published in January 2022 found that 82% of small and micro businesses will accept digital payment options this year. Visa also found that around three-quarters of small businesses surveyed said accepting digital payments was critical to their growth in 2022.

Consumers turning to BNPL services to avoid credit card debt is not surprising, given that both millennium and Generation Z buyers have complicated relationships with credit cards. However, researchers are concerned about installment payment services saddle people with more debtand critics have urged regulators to monitor the industry and protect consumers.