Twenty Percent of Consumers to Use BNPL this Holiday Season

Results of this year’s study indicate greater consumer scrutiny when it comes to what they buy and how – compared to last year more have waited to start their holiday shopping and many cited concerns about rising costs as the reason why.

Consumers had a lot of economic concerns this year, some more intense than last year.

• Worries about the affordability of gifts were greater than last year (72% in 2022 over 61% in 2021), as well as concerns over shipping delays (56% in 2021 over 64% in 2022).

There are some signs concerns over the pandemic are waning, as a greater number of consumers reported planning to do some shopping in-store this year compared to last year – only 32% of consumers reported being worried about the safety of shopping in-store compared to 47% last year. To some extent, this may also indicate consumers are planning for more deliberation this year and willing to check multiple websites or shops to ensure they are getting the best deal.

This year we made a key change in our methodology – we have now broken out a payment option – credit cards and debit cards (which were previously combined into one option) to better understand the nuances of card payments.

• This year, when it comes to holiday spending, using a debit card at checkout was the most popular option for shopping in store, but credit vs. debit card usage were equally popular online. For in-person spending, payment with a credit card was the second most popular option, followed by cash and then digital wallets.

As a trend, consumer reported usage of buy now, pay later options increased slightly from 2020 to 2021, and again from 2021 to 2022.

• This year 20% of consumers indicated they planned to use buy now pay later for holiday shopping, while another 20% had not made a decision yet. This is a payment mode where conversion is more likely to happen after consumers try it, indicating that initial hesitance can be overcome with experimentation, which often leads to adoption.

Payment via phone may have gained in popularity over the past year

• P2P apps as a method of payment had a very high conversion rate – 80% of consumers who had tried them reported using them with some frequency.
• 1-Click saved accounts also had a high conversion rate – 76% of consumers who had tried them reported using them with some frequency. Although its very common for consumers to use 1-Click account methods via personal computer, it’s a mode more typically used on a phone.
• Digital wallet usage was also rising – 40% of digital wallet users this year said they were at least somewhat confident leaving their house without a physical wallet

Some new questions were added to the study this year to better understand the decision factors spurring payment method usage – we asked consumers about the influences on their choice of spending mechanism.

• Across most demographic factors, the clear winner was ease of use, even compared against payment methods that might offer a better deal or greater security. One exception was noted – older consumers (55+) were more likely to make payment choices according to the one offering them the best deal, rather than ease of use.

Overall, holiday spending this year will likely continue to have much to do with how easy various methods of payment are for consumers to use, even above and beyond what kind of deal a payment mode may offer. However, savings were still top of mind for older consumers, and typically cited as the second greatest concern for consumers in other age brackets.