Friday, March 8, 2024
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."
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.
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 
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