Users of ‘buy now pay later services’ expect to use their BNPL accounts more frequently in future but they have very little brand loyalty, with around 70 per cent of people saying they would rather switch BNPL providers than switch to a store that has a relationship with their existing provider.
These are among the findings of a Macquarie Securities survey of 1000 US consumers, which was designed to find out what they thought about BNPL and various providers.
Macquarie also found consumers are “relatively price sensitive” when it comes to choosing a provider.
Based on its research, Macquarie expects that global spend using BNPL will grow from its current level of around A$800 billion to $3.8 trillion by 2030 – a more than four-fold increase.
On frequency of usage, Macquarie found that new BNPL users make 1.8 transactions a year using their BNPL accounts, increasing to 2.1 transactions a year among those who signed up in 2018.
On brand loyalty, Macquarie found that the “merchant owns the customer, not the BNPL”. This applies fairly consistently to all BNPL brands.
PayPal, Affirm and Afterpay were ranked as the best brands, while Quadpay, Sezzle and Splitit were the “worst”. Those results were consistent among BNPL users and all respondents.
On the issue of cost, half of current BNPL users said they were willing to pay between 0.5 per cent and 1 per cent per transaction. Almost no one would use a BNPL service that cost 4 per cent or more.
The average level of BNPL fee acceptance was lower than the typical US interchange fee for credit and debit transactions.
“We think this may be more of a potential risk for the Australian market, where the issue of no-surcharging has come up as a topic of regulatory debate,” Macquarie said.
Overall, the use of BNPL for payments is still low. Only 1.6 per cent of respondents said they use it as their primary way of making in-store payments and 3.1 per cent use it as their primary way of paying online.
When BNPL users were asked the same questions, 5 per cent said they use it as their primary way of making in-store payments and 9 per cent use it as their primary way of paying online.
The outliers are people in the 26 to 30 age bracket and the 36 to 45 bracket, who use it much more.