Two years ago, Sezzle launched a new virtual product allowing consumers who use its service to make purchases wherever digital payments are accepted. Though credit and debit still dominate the payments market, Youakim envisions BNPL taking up more space in people’s digital wallets.
About two-thirds of Sezzle’s customers have credit cards but avoid using them, Youakim said. He said most users want the purchasing power of credit without surprise debts that may last several months or longer.
“Credit cards, for a lot of people, don’t feel safe because they just don’t remember they made the purchase,” Youkim said. “We basically don’t allow people to do it, because if you miss a payment, you went too far over your skis, we stop you.”
The product is becoming popular across age and income groups at a time of uncertainty for businesses and consumers. Some recent studies highlight trouble spots among people who use BNPL while their personal savings accounts deplete and credit burdens grow. Users are reporting higher late-payment rates when using BNPL, reaching 41% this year, a LendingTree survey found.
Matt Schulz, LendingTree’s chief consumer finance analyst, tested the breadth of the loans by buying shaving cream, Chinese takeout and a Mother’s Day card. He said the expanding service can be handy in some cases — but it can also be easy to “get yourself in a little bit of a headache.”
“Just because you can buy most anything with these loans doesn’t mean that you should,” Schulz said.
