The stats for buy now, pay later holiday purchases are in, and they have surpassed expectations. According to the latest data from Adobe, BNPL accounted for $16.6 billion in online spending during the holiday season, up 14% compared to the previous year.
That figure follows on the $9.2 billion spent on BNPL from the beginning of the year through November, reflecting a 17.5% year over year growth, according to Adobe. On Cyber Monday alone, consumers spent $940 million in BNPL transactions, making it the biggest BNPL day of the entire year.
In October 2023, Adobe predicted that BNPL payment methods would see new records, driving $16 billion in online spending. That prediction proved to be entirely on the mark.
Many observers think that we are still at the early stages of the BNPL phenomenon. According to a study from Spherical Insights, the global BNPL market is expected to grow from $25.4 billion in 2022 to $160.7 billion by 2032, at a CAGR of 20.2%
Lingering Concerns
Amid continued growth, there are still concerns about the lasting effects of BNPL on consumers. A March 2023 report from the Consumer Finance Protection Bureau found that nearly 43% of respondents that used BNPL services had overdrawn a bank account in the previous 12 months. That compares with only 17% of nonusers.
The Federal Reserve Bank of New York has pointed out that the biggest users of these services are people in their 20s and 30s. The worry is that young people may be using these loans after maxing out their credit cards, loading debt onto debt. As BNPL matures, many may find it an unsustainable way to borrow money.
For those reasons, it’s important not to overreact in either direction to the holiday numbers for BNPL.
“BNPL’s star has dimmed a bit in the past year, but its popularity over the holiday season suggests that it’s not going to disappear,” said Daniel Keyes, Senior Analyst of Merchant Services at Javelin Strategy & Research. “In fact, BNPL will likely perform best during the holidays and other peak shopping periods because those times are when consumers most need the kind of financial flexibility BNPL solutions can offer.”
