Buy Now Pay Later At All-Time High On Cyber Monday, Up 42% From Year Ago

The surge in popularity of ‘buy now, pay later’ (BNPL) services has become a notable trend in the United States, with debt-ridden consumers increasingly turning to this credit lifeline, contributing to record sales during the Black Friday and Cyber Monday shopping events. This financial phenomenon appears to serve as an additional support for consumers who find themselves entangled in spending beyond their means.

According to data from Adobe Analytics, a growing number of Americans opted for short-term loans that allow for installment payments over weeks or months when making purchases on Cyber Monday.

The report highlights a substantial uptick in the utilization of BNPL services, with consumers collectively spending over $940 million on goods, reflecting a significant 42.5% increase from the previous year. This figure far surpassed Adobe’s earlier estimate of 18.8%.

Cyber Monday witnessed a significant surge in online consumer spending, reaching $12.4 billion, reflecting a 9.6% increase compared to the previous year. Notably, discretionary categories experienced the most substantial growth, with apparel registering an impressive 189% increase in online sales compared to October 2023.

Vivek Pandya, the lead analyst at Adobe Digital Insights, remarked on the unpredictability at the start of the 2023 holiday shopping season, noting that the record-breaking online spending throughout Cyber Week underscored the impact of discounts on consumer demand, particularly for high-quality products, fueling impulse shopping.

Over the five-day period from Thanksgiving Day to Black Friday and through Cyber Monday, internet sales surpassed $38 billion, surpassing Adobe’s forecast of $37.2 billion.

The emergence of the BNPL trend, initially highlighted during record online Black Friday sales totaling $9.8 billion, was attributed to its popularity among consumers striving to manage existing debts, including student loans or credit card balances amid historically high interest rates. These short-term loans provide consumers with the flexibility to pay in installments over a condensed period.

The Federal Reserve Bank of New York reports that younger consumers, facing challenges in obtaining credit cards, are increasingly turning to buy-now, pay-later alternatives. Google searches for “buy now pay later” surged over the past 30 days, reaching a peak last Thursday. Notably, searches for “buy now pay later Best Buy” and PayPal’s BNPL service reached the highest levels in at least five years.

The growing reliance on BNPL services prompted Jefferies to upgrade Affirm from underperforming to hold, recognizing the rapid adoption of these services. Concurrently, there are indications that affluent Americans are scaling back on their expenditures.

While the surge in BNPL services may contribute to robust holiday sales, it also raises concerns about the financial well-being of consumers.

Information for this story was found via Yahoo Finance and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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