Value outranks price for BNPL borrowers, study finds

Post-sale buy now, pay later options are increasingly attractive to consumers, according to the J.D. Power 2024 U.S. Buy Now Pay Later Satisfaction Study. The second annual report, published Feb. 29, 2024, found a 16 percent increase in overall satisfaction among BNPL borrowers compared to the same period last year. Top-ranking providers were Plan It by American Express with a score of 695, followed by My Chase Plan (686) and Citi Flex Pay (676).

Miles Tullo, managing director of banking and payments at J. D. Power, stated that the 4,100 BNPL borrowers surveyed between September and November 2023 were culled from an initial pool of 85,000 U.S. consumers. From that huge data set, respondents who had used BNPL within the last 90 days had the option of answering more questions about the brands they used. These additional questions concerned reasonableness of terms, ease of use and security of account data, which are key performance indicators that seemed more important to survey respondents than service-related convenience fees, he noted.

"They're saying, I like the terms of this plan and the ability to pay over six weeks instead of over two, without getting into some kind of revolving credit," he said. "It's worth the three bucks to do it that way; I'll pay that convenience fee to a trusted brand that keeps my data secure."

More diversity, choice in BNPL offerings

Additional data published by the Consumer Financial Protection Bureau in March 2023 found BNPL borrowers more likely to be indebted, delinquent in credit accounts and prone to using high-interest financial services. The Consumer Use of Buy Now, Pay Later: Insights from the CFPB Making Ends Meet Survey report also found most BNPL borrowers have access to traditional credit.

"In fact, [BNPL borrowers] were more likely to borrow using credit and retail cards, personal loans, student debt, and auto loans compared to non-BNPL borrowers," CFPB researchers wrote, estimating that most "BNPL borrowers would face credit card interest rates between 19 and 23 percent annually if they had chosen to make their purchase using a credit card."

Not all BNPL users fit the same profile, according to J.D. Power researchers, who noted that 731 survey respondents, representing 21 percent of BNPL usage, were financially healthy and reported the highest satisfaction levels with BNPL, followed by 593 financially vulnerable consumers who accounted for 32 percent of BNPL usage and had lower overall satisfaction.

Room for improvement

J.D. Power researchers found consumer expectations with the top key performance indicators were met between 53 percent and 62 percent of the time, leaving room for improvement in ease of managing payments, ease of reviewing purchases and transactions, and account management. Researchers also noted that BNPL brands are beginning to win customer loyalty, as more consumers are giving positive reviews to BNPL brands, with 48 percent vowing to return and use the same brand again, a 4 percentage point increase over the 2023 survey.

"The fact that consumers are increasingly satisfied with buy now, pay later is a good sign," Tullo said. "It shows that the industry is maturing and as consumers become more comfortable with BNPL options, they are expressing greater satisfaction."

Additional information about the J.D. Power 2024 U.S. Buy Now Pay Later Satisfaction Study is available at jdpower.com/business/payments-research-data-and-analytics

Whether you want to upgrade your POS offerings, find a payment gateway partner, bone up on fintech regs or PCI requirements, find an upcoming trade show, read about faster payments, or discover the latest innovations in merchant acquiring, The Green Sheet is the resource for you. Since 1983, we've helped empower and connect payments professionals, starting with the merchant level salespeople who bring tailored payment acceptance and digital commerce tools, along with a host of other business services to merchants across the globe. The Green Sheet Inc. is also a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals.

Notice to readers: These are archived articles. Contact information, links and other details may be out of date. We regret any inconvenience.