Why pay now when you could pay later? This is the logic Apple Pay is bringing to users through the launch of Buy Now, Pay Later (BNPL). Let’s break down what the f*ck this launch means to Gen Z.
The looming threat of recession hasn’t stopped Apple from leveling up their financial services. According to NerdWallet, BNPL, “like its name suggests, ‘buy now, pay later’ lets you make a purchase and receive it immediately but pay for it at a later time, usually over a series of installments.” Pretty simple, right?? The service exploded with pandemic-induced online shopping. Some of these installments can come with an interest or late fees depending on the number of installments.
You can still be eligible for BNPL services if you have a bad or no credit history, a potential advantage for up-and-coming consumers still figuring out their financial portfolios. With this option, Gen Z can now use methods of purchasing like BNPL to alleviate the instant financial pressure of a big purchase.
The hashtag #buynowpaylater has around 75 million views on TikTok, some being paid ads. Some are calling it a blessing, and some are calling it a curse. Scott Galloway, a marketing professor at NYU, called BNPL “the equivalent of the subprime mortgage crisis” for millennials and Gen Z in a Pivot podcast episode because of how it tricks people into buying things that they cannot afford. There are even TikToks about how people cannot afford the installments anymore, in a humorous way.
According to a survey conducted by Piplsay, 43 percent of Gen Zers have missed at least one payment in 2021. Another study done by Qualtrics for Credit Karma says that number for both millennials and Gen Z is more than 50 percent. At JUV, we wanted to test these numbers with our own research through our Receipt network, made up of 5,000+ engaged Gen Z’ers from around the world. Our Director of Research, Steph Strickland, helped compile insights from our proprietary research, and here’s what we found.
TLDR: It is undeniable that there are some risks with using BNPL products such as Klarna, Affirm, Afterpay. It is also undeniable that these past months were difficult for BNPL players, however, as CB Insights CEO Anand Sanwal recently wrote in his daily newsletter: “BNPL ain’t dead.”
BNPLempowers Gen Zers financially. There are a lot of us who have never used a credit card before, let alone that some of our international friends studying abroad are not even eligible for a credit card outside their home country. BNPL helps with financing as long as I know how to use it correctly.
And that’s where the problem starts. These products are innately empowering customers, however, there is a lack of awareness, transparency, and education around it, just as our insights concluded. Elle, in their article on BNPL, claimed that such installments can be used for two different purchases: “1) to purchase necessities, and 2) to buy non-essential items that help them maintain social status and clout, despite not having the means to pay for them.”
So, instead of positioning themselves as an installment service with no questions asked, BNPL brands should be a partner for Gen Z in financial literacy. BNPL products need to meet Gen Z where they are with full transparency.
Written By Emir Lise, Co- Authored By Steph Strickland