DATA: Millennials, Gen X Liked BNPL For Black Friday Clothing Purchases

young couple shopping

New consumer data from PYMNTS shows 3.7 percent of Black Friday online shoppers used flexible buy now, pay later (BNPL) credit offers to pay for their purchases. The study also showed that 71 percent of the time, BNPL installment plans were used to pay for clothing, followed by sporting goods, home furnishings, toys, electronics and health/personal care items, where BNPL was used about one-third of the time.

On the flip side, the survey showed that BNPL was used less than 10 percent of the time to buy cars, tools and auto parts.

Age-wise, the survey showed that BNPL purchases were skewed toward young to middle aged shoppers between 25 and 55 years old, with the youngest and oldest generations both shying away from using monthly installment payment plans. Specifically, 42 percent of Gen X shoppers (ages 40 to 55) and 40 percent of millennials (ages 25 to 40) used BNPL, compared to just 15 percent of baby boomers (ages 55 and up) and only 3 percent of Gen Z (below 25 years old) shoppers making purchases that way.

Using a three-tiered income system of below $50,000, $50,000 to $100,000 and $100,000-plus, twice as many BNPL shoppers were in the top bracket (51 percent), compared to about 25 percent in the middle and lower tiers.

In terms of disposable income, just 17 percent of consumers who were not living paycheck to paycheck and could cover their monthly bills with current earnings were, predictably, least likely to take on debt to make a purchase. At the same time, 32 percent of shoppers who said they were currently struggling to pay their monthly bills used BNPL, while half of consumers who said they were able to pay their bills but still living paycheck to paycheck chose to use BNPL and spread out payments over time, typically ranging from 6 to 36 months.

The study also showed that the use of BNPL declined as the level of consumer education went up, a trend that perhaps reflects a growing awareness of the potential cost, credit rating risk and temptation involved in making expensive discretionary purchases that are often impulsive. To that point, the survey showed that 40 percent of high school-educated shoppers took up BNPL offers, compared to just 24 percent of consumers who had a graduate degree.

Given that the survey showed 7 out of 10 BNPL purchases were used to buy clothing, the demographic breakdown of those purchases was also revealing. According to the research, the most likely BNPL shopper on Black Friday was a 40- to 55-year-old college-educated urbanite current on bills but still living paycheck to paycheck.

On the flip side, the survey showed that when it came to buying clothes with a BNPL program, a college-educated senior (55+ years old) from a small or rural town who had at least a little extra money in the bank had a zero percent likelihood of taking on BNPL debt to buy an expensive outfit or shoes.

The BNPL space has been one of the success stories of 2020. After launching its first “buy now, pay later” product in 2014, the Japanese FinTech Paidy has followed up with Paidy 3-Pay. It is an interest-free payment mechanism that allows consumers to split the cost of a purchase into three equal payments within the company’s app. The service was developed in response to feedback from Paidy’s customers and will also appear at checkout at eCommerce sites when purchasing with Paidy.

One of the original players in the BNPL space, Afterpay, surpassed $2.1 billion in sales for the month of  November, a new milestone that more than doubled last year’s November transactions, the company announced on Wednesday (Dec. 2). November sales were bolstered by a busy Black Friday and Cyber Monday, with monthly sales records set in all regions worldwide. The U.S. led the way with the highest monthly sales ever. More than 35 million leads were generated to global retailers and over 1.2 million in referrals were sent to U.S. merchants from the Afterpay Shop Directory on Black Friday alone.

Active users on the platform reached 13 million in the U.S., with about 1 million new users added, along with numerous new retailers. November also saw growth in Australia, New Zealand and the U.K. Black Friday and Cyber Monday sales in Australia and New Zealand went up more than 60 percent compared to the same period last year.

The PYMNTS September Buy Now, Pay Later Tracker, done in collaboration with Afterpay, indicated that the second quarter saw a 44.4 percent increase in sales at U.S. merchants year over year. The latest Buy Now, Pay Later Tracker released this month shows how installment payment plans can help shoppers and merchants alike.