BNPL Fintech Affirm Reveals Consumer Behavior, Shopping Trends, and Preferences for Pay Over Time Options

Many shoppers prefer using Buy Now, Pay Later (BNPL) services because of the flexibility they offer. Consumers are able to pay for items over an extended period of time, with or without having to pay interest. However, a common BNPL format has started gaining a lot of popularity among shoppers, and Affirm‘s research team reveals why this option is becoming widely-used.

As noted by the Affirm team, this option lets consumers pay for a purchase in four separate, interest-free payments every two weeks. It’s called split pay in Affirm’s product suite and somewhat similar versions are provided by other BNPL providers.

According to Affirm, what attracts clients to this particular pay-over-time feature is that it helps them avoid the negative impact on their cash flow (among other reasons).

Affirm’s researchers reportedly asked 750 shoppers, nearly half of whom were Affirm users, about their payments preferences. Over 70% had been repeat customers of Affirm’s split pay or a similar 4-payment option from another service provider. The research was carried in October 2020 and shared by Affirm in a blog post published on May 25, 2021.

When questioned about why they chose split pay (from Affirm or another BNPL provider), the respondents provided these 3 main reasons:

  • 36% want “to avoid negative impact to cash flow/budget”
  • 32% prefer “to pay over time, even if they can pay the total up front without negative impact to cash flow/budget”
  • 16% want “to take advantage of interest-free offers”

As mentioned in a blog post by Affirm:

“The preference for financial control is clear. This 4-part payment option appeals to shoppers who want some wiggle room in their budget without having to pay interest.”

One of the survey respondents said:

“It’s something I can incorporate into my budget so it’s more manageable and not feel like it’s going to be a huge strain on my finances.”

Another respondent reportedly said:

“I like that I have a little bit more breathing room than just taking $300 out of my checking account right now.”

Due to the rising popularity of using split pay (Affirm and non-Affirm versions) to buy clothing items, many merchants start (incorrectly) assuming that this payment option is just for fashion brands.

However, Affirm’s research reveals that consumers like using it for other purchases, as well. Although fashion buys were most popular (52%), respondents had been using this type of payment for home & furniture (23%), luxury (20%), fitness & gear (20%), and electronics (19%) transactions.

Affirm’s blog post further noted:

“The popularity and convenience with this form of payment has also led many to believe that split pay is mostly for purchases around $200 or less. But 39% of respondents said they would be willing to use it for a $200-$600 purchase. That means for a $400 television, for example, nearly 4 in 10 shoppers would be willing to pay $100 every two weeks to buy it.”

Affirm added that as the amount gets closer to $150 for each installment ($600 total price), the “appeal among shoppers drops for this form of payment, according to our research.” Affirm also mentioned that many consumers now prefer a different pay-over-time option “for more expensive purchases—such as monthly installments over 3, 6, 12 months or more, which Affirm can also provide for your business.”

Some of the main benefits for merchants offering split pay to their shoppers includes an “incremental revenue by increasing cart sizes and pulling forward sales that otherwise might have been lost or delayed.”

Survey respondents stated that if this 4-payment option wasn’t available for their purchase, they would have done the following:

  • Delayed their purchase (34%)
  • Not completed the purchase (27%)
  • Bought fewer items (18%)
  • Bought less expensive items (11%)

As explained by Affirm:

“Split pay can also reduce friction at checkout and accelerate repeat purchases. With Affirm, shoppers supply 4 pieces of info to get an approval decision within seconds—most customers can complete the purchase in 3 clicks. And customers pay off their purchase in 6 weeks or less, so they’re ready to make more purchases sooner.”

The BNPL Fintech firm also mentioned that their split pay comes with a “unique” benefit shoppers love: “no late or hidden fees.” Affirm further noted that their clients “always know up front exactly how much they will pay, and that amount will never change.” This helps with building loyalty that can “help your business.” Affirm partners see “an average 20% repeat purchase rate with Affirm customers,” the company revealed.

Affirm’s blog post added:

“Retailers who’ve implemented split pay with Affirm have also reported lifts in average order value, conversion, and more. Cole Haan saw a 23% lift in conversion rate and a 185% increase in daily Affirm sales volume.”

Megan Lindstrand, VP of Global Marketing for Cole Haan, remarked:

“Our customers see the Affirm split pay option as a way they can better afford buying our products for themselves—or even utilize during gift-giving season. The interest-free appeal, together with the greater conversion rate, are some ways split pay is having a positive impact on our e-commerce business.”

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