As the weather cools and tree leaves turn orange and red, consumers and retailers are gearing up for the holiday shopping season, with vendors buying now, pay later (BNPL) hoping that the good fortune seen in recent months can continue.
As students prepared to return to class in recent weeks – some for the first time in nearly two years – Brad Lindenberg, co-CEO of Zipper US, said the payment service provider saw a 50% increase in BNPL usage at retailers such as Famous Footwear, Newegg and Lids.
“Back to school is one of those times of the year when families have to shell out money for their kids and really need to buy these things before school starts,” Lindenberg said. “And BNPL is a great tool to be able to do that and also budget over the next few weeks as they get paid.”
The increased use during back-to-school shopping, typically one of the biggest consumer spending events of the year, also indicates a great holiday season for Zip and other BNPL companies, Lindenberg said, making of the end of the year perhaps the biggest quarter. Zip never had. Zip still sees “massive spikes” in usage around Black Friday and Cyber Monday, he noted, but BNPL as a whole is growing in popularity, leading to further usage. more important.
“There was a lot of savings built up, and the people who were given the incentives and also locked in the house really had a real opportunity to go out and shop,” Lindenberg said. “And you associate that with the awareness of our product – there has been a huge change in awareness of this category… and consumers are now starting to use our services as their primary card and primary payment method. “
Walmart said last week that it would not be offering its vacation layaway program this year, instead telling customers to use its BNPL option through Affirm. The retailer had reduced its seasonal layaway options at most stores last year, a company spokesperson told PYMNTS, and “based on what we have learned, we are confident that our payment options offer the right solutions for our customers ”.
See also: Walmart cancels vacation layaway; Amazon reaches out to SMEs
Room for more
Even with all this growth, only 29 million Americans, or 14% of online consumers, have used BNPL, according to a PYMNTS study, which Lindenberg says leaves “a lot of new opportunities” for merchants and suppliers. of payment.
“There are a lot of people who don’t know the product, the category, who are going to continue to educate themselves and use it,” he said. “And then, on the merchant side, some of the biggest merchants… don’t have full BNPL offerings.
Some, Lindenberg noted, only offer BNPL for higher priced products and don’t have a solution for low value orders, “so it’s not fully penetrated. There are a lot of advantages there. Ecommerce giant Amazon has just started offering BNPL itself, partnering with Affirm last month to provide the payment option to consumers.
Read more: Amazon enters BNPL space with Affirm Partnership
While Zip has 50,000 merchants fully integrated with its payments ecosystem, Lindenberg said the company also allows consumers to use its product wherever they shop using a digital wallet, opening doors. to about half a million traders each month.
“We are really just a payment channel,” he said. “.
Lindenberg said he was focusing more on Average Order Value (AOV) than specific verticals, noting that while Zip’s limit is around $ 1,500, most online orders are between 100 $ and $ 120.
“Our product, the pay-in-four product, is fantastic for this line, and that’s really where we try to focus on the verticals that we’re looking for,” he said. “We are very open. We’re going to write just about any vertical that makes sense.
Opening of BNPL for B2B payments
Zip has also received a growing number of inquiries about BNPL for B2B payments, especially from merchants trying to buy social media ads or entrepreneurs who need to purchase hardware for a business. job.
In Australia, where Zip’s headquarters are located, the company launched a feature with Facebook that allows businesses to pay over time for ads, which Lindenberg says allows those with an acquisition funnel to customers who have a short time in terms of return on investment to preload their ad spend. .
Granted, offering BNPL for B2B payments requires “a bit of a different perspective on risk decision-making,” Lindenberg said, because Zip makes a decision based on a business or entity, not of an individual, but it mostly boils down to different data points. .
“So it’s really about feeling comfortable with the way you do that,” he said. “But once that’s aligned, it should be pretty straightforward, and I think that’s another string that we’ll be looking for soon.”