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Buy Friday, Pay Later

by jcp

By: Anthony Drury- Managing Director at Zip UK.

This year’s Black Friday is going to be like no other that has been before, but it’s not for the reason that you might think. According to our latest data, after 18 months of uncertainty and cancelled plans, 17 million UK shoppers are set to spend a total of £7.5 billion over the course of the Black Friday weekend, £5.76 billion of which will be spent online. The average spend is expected to rise from £233, to £261. So far, so unsurprising, given the gradual return to health of consumer confidence since the economy reopened after lockdown. What’s different about this year, however, is the maturation of a new fintech which has firmly established itself in the past 18 months and is changing the consumer experience for the better – Buy Now, Pay Later.

Buy Now, Pay Later (BNPL) is increasingly becoming an essential part of our personal finance toolkit. It was designed to complement consumer spending, giving people a choice that more traditional forms of credit are often unable to do. As such, they have become a staple for many consumers, especially in the run up to the festive season. Recent research has found that 8% of shoppers are considering using the service to buy gifts this festive season, and contrary to the stereotype, it’s actually the older generations who are looking to alternative forms of credit like BNPL. The latest data shows that the over 35s have a greater understanding of BNPL services compared to younger adults (89% compared to 82%), and our own internal data shows that the use of BNPL amongst this age group is growing fast. It’s this same group (aka Generation X) who are also expected to spend the most on Black Friday – an average of £339 – so you can see why BNPL might be their tool of choice. With no interest fees and regular, steady instalments, it’s much fairer than a credit card.

It’s not only BNPL’s offer of interest-free credit that will attract shoppers this weekend, it’s the transparency of repayments too. According to research, almost half of all shoppers (45%) will aim to finish their 2021 Christmas shopping, on average, a week earlier than in previous years. Supply chain concerns amongst other things are spooking consumers, and no one wants to miss out on their favourite festive treats. As such, budgeting tools like BNPL are valuable to shoppers because it helps them manage their cash flow. You know exactly what you’re paying and when, over four agreed instalments. Especially important this year if you start your spending a little earlier.