Buy now, pay later (BNPL) services have changed the retail landscape, with many customers and retailers alike using these services from companies such as Afterpay, Zip and Klarna. In the 2021-2022 financial year, data from the Reserve Bank of Australia suggests that there were 7 million active BNPL accounts in Australia worth $16 billion – about 37 per cent more than the previous financial year. Almost half of Aussies have used a BNPL service Monash University’s Australian Consumer and R
mer and Retail Studies research unit ran a pulse survey in June 2023 to gauge Aussies’ use of BNPL services in general and across a range of retail categories. In the survey of Australian shoppers, 42 per cent of respondents said they had used a BNPL service in the last 12 months. This result is broadly consistent with research from the Australian Finance Industry Association for example, which found that 38 per cent of Australians had used a BNPL service at least once. Of those who had used a BNPL service in the last 12 months, frequency of use varied, with almost half of these respondents (40 per cent) using it more than seven times in the past year, and roughly a third using it 1-3 times (33 per cent) and 4-6 times (28 per cent). The most commonly cited reasons for using BNPL services were being able to spread the payment over time (28 per cent), not being able to afford it at the time of purchase (28 per cent), and ease and convenience (20 per cent). All age groups are using BNPL – some more than others While BNPL services are often thought to be used by younger consumers, our research shows that the older demographics are also using these services – and sometimes more frequently than their younger counterparts. We found that usage of a BNPL service in the last 12 months was highest in the 35-44 year old age group, with 59 per cent of this group having used BNPL at least once in the past year, followed by the 18-24 year old and 25-34 year old age groups (both 53 per cent). Older age groups were less likely to have used BNPL services in the last year, 29 per cent of the 45-54 year old age group, 25 per cent of the 55-64 year old age group, and 12 per cent of over 65’s had used it. However, frequency of use varied, with some age groups using BNPL services more frequently than younger age groups, as in the case of the over half (53 per cent) of 55-64 year olds who used BNPL services more than seven times in the past year. Clothing is the most popular purchase using BNPL When it comes to what consumers are purchasing via BNPL, clothing and apparel was the most common product category, with 67 per cent of respondents reporting they had used BNPL to make a purchase from this category. This was followed by household goods (36 per cent); consumer electronics (33 per cent), groceries (32 per cent) and personal care (31 per cent). When it comes to age, clothing and apparel was also the most popular category for BNPL purchases across all groups, but the second most purchased category differed. For example, clothing and apparel was the most common category for a BNPL purchase among 18-24 year olds (72 per cent), followed by personal care (41 per cent) and groceries 39 per cent); whereas for 35-44 year olds, clothing and apparel was the most common category for a BNPL purchase (59 per cent), followed by consumer electronics (37 per cent) and household goods (31 per cent). Attitudes towards BNPL services are mixed Over half of respondents (62 per cent) in the survey agreed that BNPL services were useful; this was higher amongst younger age groups, rising to 78 per cent among 18-24 year olds, 80 per cent among 25-34 year olds, and 78 per cent among 35-44 year olds. Despite being considered relatively useful, BNPL services were also deemed to be risky by half of respondents (55 per cent). Age groups were broadly consistent in their assessment of the riskiness of BNPL, with the perception of risk being highest amongst the 25-34 year old age group (68 per cent). Interestingly, this group was also the most likely to report incurring a late fee due an overdue instalment of their BNPL payment (36 per cent), slightly higher than the average of 29 per cent of respondents. With the Government proposing to crackdown on BNPL services by require BNPL providers to hold Australian credit licences, it remains to be seen whether this will impact on consumer usage.