Bank of America’s latest report signals that the growth of buy now, pay later services is continuing to slow down. The bank’s analysis of its internal data found that the proportion of Bank of America customers having made a BNPL payment grew by only half of a percentage point in March 2024, relative to the year-earlier period, down from the one percentage point increase logged in March 2023, and almost 2.5 percentage points in March 2021.

In another report released last December, Bank of America found that the share of U.S. consumers who downloaded BNPL apps between Black Friday and Cyber Monday dipped by 4.5%, compared to the previous year. That was an about-face from 2022 when BNPL app downloads surged 4.4% over 2021.

In addition to tracking the slowing growth, Bank of America’s findings further contextualize other research suggesting that financially struggling consumers are turning more to installment payment providers. Six in 10 BNPL users who responded to a quarterly survery by the Federal Reserve Bank of Philadelphia said they experienced some sort of financial disruption in their lives in the previous year, including loss of government benefits or a natural disaster. Another survey from YouGov and Bankrate released last month found that half of respondents used BNPL services to stretch their cash flow over installments.

Meanwhile, industry analysts have sounded the alarm on the health of the BNPL market. In November, Moody’s warned in its report that some BNPL providers could be acquired, and others might shut down altogether if they cannot withstand regulatory changes and compete with one another. 

Still, the buy now, pay later market continues to attract retailer partners. Last month, Walmart introduced installment payment provider One to customers in select stores. The retail giant has also partnered with Affirm to provide a BNPL option.

By Lynne Marek on May 6, 2024
Original link