CHICAGO–Buy now, pay later (BNPL) financing is getting strong reviews from the people who use it.
According to a new TransUnion survey, 89% of those who have used BNPL say they are satisfied or very satisfied with the credit product, with 85% of BNPL users saying they 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, according to TransUnion.
“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,” the company said in releasing its findings.
Even more notable, TransUnion said, is the survey found 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.
Creating ‘Visibility’
“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,” Jason Laky, executive vice president and head of financial services at TransUnion, said in a statement. “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. 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.”
New Capabilities
TransUnion said it launched new capabilities to accurately capture and reflect the unique features of BNPL loans in 2022, and that its 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,” the company said. “This is very different from how current scores expect products like installment loans to be used, so the changes were necessary.”
Liz Pagel, senior VP and head of consumer lending with TransUnion, said the new reporting methodologies 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.
“Today, three in four BNPL users believe that using BNPL will impact their credit scores positively,” said Pagel.
Lack of Understanding
TransUnion said 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, it added.
According to TransUnion, in looking at both users and non-users of BNPL products, the sentiment around credit bureau reporting was positive. Additional findings include:
- More than 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.
‘Here to Stay’
“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,” said Pagel. “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.”
For consumers, TransUnion has additional information here.