Bank of America Report Shows Slowing Growth in Buy Now, Pay Later Services

Bank of America's most recent report indicates a deceleration in the expansion of buy now, pay later (BNPL) services, reports PaymentsDive. According to the bank's analysis of its internal data, the percentage of Bank of America clients who utilized BNPL payment methods only increased by half a percentage point in March 2024 compared to the same period last year. This marks a decline from the one percentage point rise recorded in March 2023 and the nearly 2.5 percentage point increase in March 2021.

Another report released by Bank of America in December highlighted a 4.5% decrease in the number of U.S. consumers downloading BNPL apps between Black Friday and Cyber Monday compared to the previous year, reversing the 4.4% surge observed in 2022 over 2021.

In addition to these findings, Bank of America's research aligns with other studies indicating that financially distressed individuals are increasingly turning to installment payment services. According to a quarterly survey conducted by the Federal Reserve Bank of Philadelphia, six out of ten BNPL users reported facing financial challenges in the preceding year, such as the loss of government benefits or natural disasters. Another survey by YouGov and Bankrate, released recently, revealed that half of the respondents utilized BNPL services to manage their finances by spreading payments over time.

Despite concerns raised by industry analysts about the sustainability of the BNPL market, with Moody's warning of potential acquisitions or closures of providers due to regulatory pressures and competitive dynamics, retailer partnerships in this sector persist. For instance, Walmart recently introduced the installment payment service One in select stores, in addition to its existing partnership with Affirm to offer BNPL options.