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Multinational computer software company Adobe has released data highlighting the significant rise in the use of “Buy Now, Pay Later”‘(BNPL) services among consumers during Cyber Monday, which saw a major increase in sales this year.
Cyber Monday witnessed remarkable growth in 2023, with online spending surging to a whopping $12.4 billion, reflecting a 9.6 percent year-over-year increase. This surge, surpassing Adobe’s initial projection, reaffirmed Cyber Monday’s status as the biggest online shopping day ever. During the peak hour (10:00 to 11:00 pm Eastern), consumers spent an astonishing $15.7 million every minute.
“The 2023 holiday shopping season began with a lot of uncertainty, as consumers shifted their spending to services while dealing with rising costs across different facets of their lives,” said Vivek Pandya, lead analyst, Adobe Digital Insights. “The record online spending across Cyber Week, however, shows the impact that discounts can have on consumer demand, especially with quality products that drove a lot of impulse shopping.”
One of the most striking trends during Cyber Monday 2023 was the major growth of “Buy Now, Pay Later” (BNPL) services. BNPL drove a remarkable $940 million in online spending on Cyber Monday, marking a substantial 42.5 percent increase from last year as consumers sought more flexible payment arrangements. The number of items per order using BNPL rose by 11 percent, Adobe reported.
The entire Cyber Week, covering the five days from Thanksgiving to Cyber Monday, generated a total of $38 billion in online spending, reflecting a 7.8 percent growth.
The rise of BNPL services like Affirm, PayPal, Afterpay, Klarna, and Zip has contributed to the surge in online retail shopping. These BNPL providers partner with online merchants to extend loans to customers, allowing them to pay for their purchases in installments with zero interest, making online goods more affordable, especially for consumers with lower credit scores. But some experts warn, BNPL usage could lead to greater consumer debt.
Credit expert John Ulzheimer said in 2021 BNPL agreements can lead to as much financial debt as credit cards if not used with caution.
“People tend to lose their minds financially speaking, right around Black Friday,” Ulzheimer told CNBC. “So, when you combine a higher delinquency rate with more debt, which is what happens at the end of the year because of holiday shopping activities, you are combining two things that are pretty dangerous.”
Photo by cottonbro studio: https://www.pexels.com/photo/person-holding-black-iphone-5-5076511/
