BNPL User Profiles Clarified By CFPB Study


A new report from the Consumer Financial Protection Bureau uses data from surveys and administrative sources to explore the profile of consumers who use buy now, pay later (BNPL) offerings. The report defines a BNPL product as a zero-interest, pay-in-four (or fewer) installment loan that facilitates purchases at the point of sale.

According to the report, 17% of consumers used BNPL at least once in the year leading up to the survey. The study revealed that individuals who identify as Black, Hispanic, or female or have a household income ranging from $20,001 to $50,000 were more inclined to use BNPL as opposed to white, non-Hispanic, male consumers, or those with a household income below $20,000. Conversely, those with a high school diploma or lower level of education were less likely to use BNPL compared with those who attained at least a bachelor’s degree.

The study has some limitations, such as the fact that identification of BNPL use is based solely on consumer self-reporting. Consumers may be unclear about what distinguishes BNPL from similar products. Furthermore, the survey targets only consumers with a credit record, neglecting an estimated 11 percent of consumers without one.

The report’s findings suggest that BNPL financing may be particularly attractive to consumers with lower credit scores, as the average percentage rate (APR) interest on credit card debt is particularly high for this group compared with consumers with higher credit scores.

Despite lower scores, the majority of BNPL borrowers have access to traditional credit. In fact, during the survey look-back period from February 2021 to February 2022, BNPL users were more likely than non-BNPL borrowers to use traditional credit products, including credit cards, retail cards, personal loans, auto loans, and student debt.

“The study seems to contrast marketing efforts which advertise the BNPL product as a tool for credit access,” says Ben Danner, a Senior Analyst at Javelin Strategy & Research.“The growth of BNPL financing is likely due to its convenience and flexibility—not due to lack of access to alternative credit products.”


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