In the face of rising inflation, many consumers are increasingly relying on installment payment services like Klarna to manage their budgets. Klarna reported a significant 29.5% increase in orders on Black Friday, compared to the previous year, indicating a growing trend in the ‘buy now, pay later’ (BNPL) sector.
This surge in BNPL usage aligns with a Klarna survey, which revealed that 81% of respondents find the option of interest-free installment payments particularly useful during the holiday season. This sentiment was even more pronounced among Gen Z shoppers, with 89% expressing a preference for this payment method.
The trend is not just a seasonal spike; it’s part of a broader increase in BNPL transactions. Adobe’s Analytics showed a 78% rise in BNPL orders and an 81% increase in revenue during a week in November 2022. Additionally, a PYMNTS report highlighted that over 10% of online Black Friday purchases last year were made using installment payment services.
Klarna’s North America head, Kristina Elkhazin, noted the growing consumer concern over credit card debt, with many doubting their ability to fully pay off holiday credit card bills. This concern is driving more consumers toward BNPL options.
The BNPL industry is not just appealing for holiday shopping; it’s gaining overall popularity. Bank of America Securities data shows Afterpay leading in U.S. monthly active users, followed closely by Klarna and Affirm.
The industry is becoming increasingly competitive, with major retailers entering the fray. For instance, Amazon announced plans to extend its installment payment service to other retailers through Amazon Pay, allowing shoppers to pay for purchases of $50 or more in monthly installments. This move signifies the growing importance and integration of BNPL services in the broader retail landscape.