'Tis the Season for Buy Now, Pay Later

Buy now, pay later (BNPL) companies that offer interest-free payments on big-ticket purchases have seen an increase in popularity since the beginning of the Covid-19 pandemic as millennial and Gen Z consumers use them as an alternative to credit cards when shopping online. New data from BNPL platform Klarna shows growth has only spiked during the key holiday shopping occasions of Cyber Monday and Black Friday. The Swedish financial services company saw a 129% increase in U.S. Cyber Monday sales employing its payment options compared to 2020. Shoppers seemed to be waiting until the end of the day to make their purchases, with sales peaking at 11 p.m. ET, an 894% increase at that time compared to Klarna’s daily average. The first hour of Nov. 29 saw a 391% increase in shopping compared to the average. The company also saw a 141% increase in Black Friday purchases over last year. Sales began spiking at 1 a.m. ET, up 499% compared to a typical day for the platform and peaked with an 886% increase at 1 p.m. ET. More than half (52%) of Klarna’s Black Friday shoppers were millennials and 13% were Gen Z. However, data showed other generations are also adopting the service: 6% of shoppers were baby boomers and 29% were Gen X, who showed the highest increase in use during Black Friday compared to a typical day. Data also showed the service is being used to buy a wide variety of products. The most popular categories Klarna users shopped on Black Friday were clothing and shoes, entertainment, home and garden, and children’s products. The top categories varied by region, with South Atlantic shoppers most likely to buy entertainment products while Pacific buyers favored health and beauty items, and Mountain consumers sought deals on children’s products. Similarly, another BNPL platform, Afterpay, reported in-store sales using its service on Black Friday were up 442% compared to 2020. In addition, Afterpay said it saw a 34% increase in in-store and online orders. A spokesperson said this reflects an increase in both in-store and online payments via Afterpay compared to the same period last year. Fueled by the Pandemic, Buy Now, Pay Later Is Reaching an Inflection Point