Digital payment companies and buy now, pay later providers got a boost from strong e-commerce sales during a robust Black Friday through Cyber Monday shopping weekend.
This month is expected to be the biggest on record for BNPL, according to Adobe Analytics latest e-commerce data on holiday shopping.
Use of the installment loans reached an all-time high on Cyber Monday, contributing $940 million in online spending, Adobe said. That was a 42.5% increase over last year. The number of items per order that tapped BNPL also increased 11% year-over-year, Adobe said.
From Nov. 1 to Monday, BNPL has driven a total of $8.3 billion in online spending, Adobe said. Swedish BNPL company Klarna, one of the biggest BNPL providers, said U.S. shoppers placed 29.5% more orders through Klarna this Black Friday compared to last year. Other big BNPL players in the market include PayPal, Affirm and Afterpay.
Adobe is clocking about 17% growth in BNPL use thus far this holiday season, said Vivek Pandya, lead analyst at Adobe Digital Insights, in an interview. About $17 billion is expected to be financed through BNPL this season, he said, up from $14.5 billion in 2022.
For e-commerce, BNPL is “a vector that’s helping drive up growth,” along with other factors like mobile utilization and discounts, Pandya said.
Overall, holiday shoppers spent about 7.8% more online between Thanksgiving Day and Cyber Monday this year compared to last, totaling $38 billion, Adobe said. The Black Friday to Cyber Monday weekend is the biggest shopping window of the season, but it took strong, competitive discounts on goods to produce the levels of growth seen, Pandya said.
A good deal might nudge a shopper to buy and the ability to break the total into interest-free installments can help close the sale, especially amid the current economic environment, he said. Orders tapping BNPL tend to be 10% to 20% larger than non-BNPL orders, he noted.
“Some of the consumers are going to leverage it just because it’s an easy, flexible way to process a payment and they just prefer it, but some of them are using it because they’re in a more strained financial position and are having to lean on it more,” Pandya said. Researchers with the Federal Reserve Bank of New York noted in September that consumers who use BNPL to make purchases tend to be “financially fragile.”
BNPL exploded during the COVID-19 pandemic’s e-commerce surge and continues to grow, but it still represents a small share of total online spending throughout the year, about 7% to 10%, Adobe said. Credit cards remain the dominant payment method online, Pandya said. Adobe doesn’t track share among large BNPL market players.
Shoppers spent 5.5% more online on Thanksgiving, amounting to $5.6 billion; 7.5% more on Black Friday, totaling $9.8 billion; 7.7% more over the weekend, amounting to $10.3 billion; and 9.6% more on Cyber Monday, amounting to $12.4 billion.
Other payments companies reported robust activity during the holiday weekend. Digital payments company Stripe said Tuesday it processed about 300 million transactions that totaled about $18.6 billion in payment volume between Black Friday and Cyber Monday. “It was the largest ever four-day period on Stripe,” the company said in a news release. About 30,000 Stripe customers worldwide notched daily sales records, the company said.
Digital payments company Block collected data from merchants who use its Square seller services and those who offer Afterpay’s BNPL services and said 70 million transactions occurred between Black Friday and Cyber Monday, according to a Tuesday report. That’s a 14% increase over last year, the company said.
Buy now, pay later transactions through Afterpay were up 19% year over year. The Afterpay app experienced 16% growth in use during the shopping weekend. For Square sellers, transactions involving Afterpay grew 47% year over year, Block said. The company declined to provide actual figures for 2022 or 2023.