Far Majority of Consumers Satisfied with BNPL and Three in Four Expect Such Loans Will Impact Their Credit Scores Positively
July 11 2024 - 7:00AM
Millions of U.S. consumers have used Buy Now, Pay Later (BNPL)
loans with 89% stating they are satisfied or very satisfied with
the credit product. A new survey from TransUnion (NYSE: TRU) also
revealed that 85% of BNPL users would recommend such loans to
others.
The research, conducted among 1,200 U.S. consumers in the second
quarter of 2024, explored the general usage and behavior of
consumers around BNPL loans. BNPL is an installment loan
established at the point-of-sale for the purpose of financing a
one-time, unsecured retail transaction. It allows consumers to
finance a purchase with multiple, equal payments instead of one
lump sum.
More than 100 million consumers* have used BNPL and the number
of users is expected to grow as TransUnion’s research found nearly
40% of those who haven’t used these loans are likely or very likely
to use them in the future. Notably, a higher 53% of non-users would
be likely or very likely to use BNPL if it had the potential to
have a positive impact on credit scores.
“TransUnion is leading the effort with lenders to facilitate and
accelerate BNPL credit reporting to create visibility to this
growing segment of the financial services industry. Consumers
deserve to have their BNPL credit included in their credit history,
which could lead to more access to credit for a generation of
consumers who have embraced BNPL as an alternative to traditional
borrowing,” said Jason Laky, executive vice president and head of
financial services at TransUnion. “Our research indicates that the
BNPL industry is attracting a large base of consumers who say that
the ability to easily track payments and balances attracts them to
these products – once they are able to see their BNPL loans in
their credit file, that will be even easier.”
TransUnion launched new capabilities to accurately capture and
reflect the unique features of BNPL loans in 2022. The new
methodology will account for the high frequency nature of such
loans. The survey findings underscore the high usage patterns of
BNPL loans with 80% of users utilizing BNPL more than once a
year. This is very different from how current scores expect
products like installment loans to be used, so the changes were
necessary.
“The new reporting methodology will allow models to give
consumers credit for making on-time payments on their BNPL loans
without penalizing them for using them more frequently than typical
installment products,” said Liz Pagel, senior vice president and
head of consumer lending at TransUnion. “Today, three in four BNPL
users believe that using BNPL will impact their credit scores
positively.”
As more and more consumers across different age ranges and
credit scores use BNPL products responsibly, the loans’ inclusion
on the credit file will bring in more consumers who are currently
either left out of the system entirely, or who are struggling to
rebuild credit.
The survey also reflected a lack of consumer understanding of
the current state of BNPL bureau reporting. Approximately three in
10 consumers (28%) who use BNPL cited being concerned about its
impact on credit scores. Today, the vast majority of BNPL loans are
not reported to the CRAs.
Looking at both users and non-users of BNPL products, the
sentiment around credit bureau reporting was positive:
- Over half of BNPL users across high-, medium-, low-income tiers
ranked the ability to add payment history to build credit scores as
an important or very important feature (low income - 56%, medium -
61%, high - 64%)
- 86% of BNPL users would be very likely or likely to use BNPL
products if it could positively impact credit scores.
- 53% of non-users said that they would be likely or very likely
to use BNPL products if it could have a positive impact on credit
scores.
“One of the key takeaways from the research is that BNPL is here
to stay. Consumers find value in the product and they
overwhelmingly like the experience of using it. While the financial
services industry is clamoring for visibility into BNPL data,
consumers see the benefits of credit reporting as well. This
growing industry could become a force for financial inclusion as
the data begins to enter the credit reporting ecosystem,” concluded
Pagel.
TransUnion is ready to help consumers understand the current and
future states of BNPL reporting. More details about the BNPL
research can be found here. To learn more about BNPL and your
credit, click here.
Survey Methodology
U.S. online research panel of 1,200 respondents (500 non-BNPL
users and 700 BNPL users). The survey was conducted between 30th -
31st May 2024 and distributed through the TolunaStart platform. The
survey was designed in collaboration with key business
stakeholders. The research results are unweighted and statistically
significant at 95% confidence level with an error margin of +-4.4%
and +-3.7% for the samples of 500 non-BNPL users and for 700 BNPL
users, respectively.
*Based on a TransUnion Q2 2024 Consumer Pulse study that found
50% of adult Americans have used BNPL loans at least once.
About TransUnion (NYSE: TRU)
TransUnion is a global information and insights company with
over 13,000 associates operating in more than 30 countries. We make
trust possible by ensuring each person is reliably represented in
the marketplace. We do this with a Tru™ picture of each person: an
actionable view of consumers, stewarded with care. Through our
acquisitions and technology investments we have developed
innovative solutions that extend beyond our strong foundation in
core credit into areas such as marketing, fraud, risk and advanced
analytics. As a result, consumers and businesses can transact with
confidence and achieve great things. We call this Information for
Good® — and it leads to economic opportunity, great experiences and
personal empowerment for millions of people around the world.
http://www.transunion.com/business
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Contact |
Dave Blumberg |
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TransUnion |
E-mail |
dblumberg@transunion.com |
Telephone |
312-972-6646 |
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