Soaring BNPL use during Prime Day reflects increasing demand for the payment method

Article by Grace Broadbent | Jul 14, 2023

The news: During Amazon Prime Day, shoppers used buy now, pay later (BNPL) plans 20% more than they did last year, per Adobe Analytics.

On the first day of the sales event, BNPL transactions accounted for 6.4% of all orders and created $461 million in revenues, per Adobe.
Categories that propped up this growth include apparel, furniture and home, and electronics.
Overall sales on the first day of Prime Day reached $6.4 billion, up 6% year over year (YoY).
The average spend per order totaled $56.64, up from $53.14 the prior year, per Numerator.

Why this matters: Much of this BNPL volume likely went to Amazon’s partner Affirm. Affirm is directly integrated within Amazon Pay, putting it front and center at checkout. The BNPL player’s growth has cooled over the past year, but these sales likely helped it regain momentum.

Amazon also has a BNPL partnership with Citi; select cardholders can access Citi Flex Pay in their Amazon Pay wallets. Citi likely benefited from the sale as well, boosting its BNPL strength.

Zooming out: Despite some BNPL firms losing momentum over the past year, overall use is still trending up.

We expect 82.1 million US consumers will use BNPL in 2023, growing 31.6% YoY. And overall US BNPL payment value will reach $71.93 billion, increasing 19.7% YoY, per our forecast.
While younger consumers still have the highest levels of penetration by age, older consumers are also contributing to this growth. 28.9% of Gen X will use BNPL in 2023, up from just 3.3% in 2019. And 13.0% of baby boomers will use the payment method, up from 0.6% in 2019.
And female users still outpace male users, with 46.3 million female users versus 35.8 male users.

The challenge: The spike in BNPL use over Prime Day—as well as overall growth—raises some concerns.

Consumers may be overextending themselves: 42% of US users said they’ve made a late payment on a BNPL loan, per March 2022 polling by LendingTree. And because most BNPL payments aren’t reported to credit bureaus, consumers can take out multiple loans across providers to make ends meet, which increases their chances of defaulting.