With Black Friday, Cyber Monday and the Christmas season fast approaching, big retail brands and lenders are looking towards BNPL to help their customers digest the high holiday costs in a cash-strapped economy. Having your own BNPL solution in place is critical to capturing your slice of the holiday pie.

And there’s more than enough pie to go around.

Last year alone, U.S. consumers spent $204.5 billion online from November 1 to December 31 2021, at the peak of the holiday season. This was an incredible 8.6% increase over the previous year’s spending.

Retail Dive

And with this, came a surge in demand for BNPL.

Top BNPL Holiday Stats 2021

  • BNPL transactions increased by 30% during the 2021 holiday shopping season. (ACI Worldwide)
  • BNPL holiday revenue grew by 27% from 2020 to 2021, and 475% from 2019.

The reason for this high demand for BNPL is simple. The extra holiday spending put pressure on consumer cashflow. With BNPL, consumers can simply spread their gift purchase costs over time to fit their budget constraints.

What consumer behavior can we expect to see over the 2022 holiday season?

BNPL Holiday Predictions 2022

Four in every ten consumers plan on using BNPL to pay for their holiday purchases. (Bluedot)

48% of Gen Z survey respondents, 47% of Millennials, 40% of Gen X and 14% of Baby Boomers intend to pay with BNPL. (Bluedot)

19% will use BNPL because of low cashflow. (Bluedot)

Total BNPL transaction value in the US is expected to hit $75.6 billion this year, a 77.3% year-on-year increase from 2021. (Insider Intelligence)

5 Reasons to Offer BNPL over the Holiday Season

Benefits to Merchants:

  1. Compete in a crowded market
  2. Drive conversion rates
  3. Increase average order value (AOV) and sales
  4. Build customer stickiness (with white-label BNPL)
  5. Access key consumer behavior data

Benefits to Lenders:

  1. Access new consumers
  2. Onboard new merchants
  3. Increase consumer financing revenue
  4. Remain relevant in the market
  5. Compete with BNPL fintechs

5 Ways to Capture Your Slice of the BNPL Holiday Pie

Lenders and merchants need to make financing products more accessible to their customers, especially during the holiday season when consumers typically need help with cashflow and experience pressure from increased spending.

Here are some ways that merchants and lenders can prepare for the higher demand for BNPL over the holidays:

1. Offer a range of BNPL financial products to cater to all consumer needs and ticket sizes including:

Split pay

– Lines of credit

– Installment loans

2. Make sure you offer BNPL across all channels, online and in-store.

3. Capture higher B2B sales as small to medium businesses need to boost their inventory and often need B2B financing to help them cover the increased stock costs.

4. If you haven’t yet launched your BNPL program, find a solution that can go live in a few weeks so that you can meet the end-of-year demand. Examples of BNPL solutions that are quick to implement include:

– Virtual card programs can be live quickly.

– Look for an e-commerce platform plugin if you have an online store.

5. Maximize customer approval rates and conversions with a multi-lender waterfall BNPL solution that automatically passes a customer from tier-1 lender to tier-2.

Responsible Spending and Lending Over the Holidays

When you help your customers spend responsibly, you’re actually increasing your customer lifetime value, as they’ll know that you aren’t just out for another sale, but have their best interests at heart.

This is the most effective way to build customer trust, loyalty and brand equity.

By providing a BNPL solution from a regulated financial institution, such as a bank, merchants can help their customers spend and lend responsibly.

The Rise of BNPL in a Down Economy

With this year’s added pressure of inflation and rising interest rates, consumers will find the 0% interest BNPL options even more attractive.

While large ticket items, such as TVs and other electronics, usually come with an interest-bearing financing option, small to medium ticket purchases are often associated with an interest-free split pay product, such as pay in 4.

Wrapping Up

Consumers are expecting BNPL as a payment option when shopping this holiday season. Now more than ever, merchants and lenders need to have a competitive offering in place.

The quickest route to market is a virtual card BNPL or adding an ecommerce plugin to your online store.

With a white-labeled solution in place, merchants retain full control over the customer relationships and data, and gain opportunity to build their own brands,

BNPL whitepaper for merchants

Disclaimer: The information in this article is for informational purposes only, and should not be construed or relied upon as legal advice on any subject matter. The author is not responsible for any consequences whatsoever arising from the use of such information.