Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.
Data for today’s episode is provided by Mercator Advisory Group’s Viewpoint: The Influence of BNPL on Debit Cards and Account-to-Account Transfers
Buy Now, Pay Later: An Estimated $17 Billion Opportunity for Debit & ACH
- If repayment preferences and projections are applied to the estimated $39 billion BNPL market, the result is an estimated $17 billion annual transaction opportunity.
- This estimate is based upon the following premises:
- Nearly all BNPL who would have used a debit card for their shopping would use debit or ACH for their repayment transactions.
- Only 10% of credit card preferring shoppers would use debit or ACH to avoid the potential of incurring interest expense.
- One half of the population who otherwise would not have made the purchase at all use debit or ACH to make repayments.
- All check and cash shoppers would choose a debit card or ACH direct debit to make their repayments.
Buy Now, Pay Later (BNPL) payment plans are an extension of credit to consumers provided at the point of sale, often at no cost to the consumer. The option for free loans has fed the rapid adoption of BNPL, influencing the product plans for credit card issuers, merchants, networks and processors. Merchants and issuers want to do business with younger consumers who do not have credit cards or who are concerned about accruing debt, as well as more established buyers who value the opportunity to stretch payments over several weeks. Mercator Advisory Group analysis finds the U.S. BNPL market has grown from a negligible level just three years ago to an estimated $39 billion in purchases in 2020.
As much as BNPL has and will continue to upend traditional forms of credit, it is also having an influence on debit cards and ACH as forms of repayment, a topic that until now has been largely overlooked.