New data has revealed just how popular “buy now, pay later” (BNPL) services are becoming with Millennials.
GlobalData has called the method of payment a “lucrative payment tool”, thanks to its provision of flexibility for consumers who can pay for goods and services at a later date, with little to no interest payments.
The real estate industry has been no exception, with a number of companies exploding onto the scene, providing agencies and consumers alike with various applications of the alternative credit tool, from cash flow relief for businesses to pre-sale and rental renovations for vendors and landlords, all targeted at improving financial outcomes for clients.
While some of this has been targeted at the property market, more recently, we’ve seen BNPL become available for agents and businesses looking to market their own services within their communities.
REB has previously considered seven ways agents, vendors, and business owners alike are benefiting from the payment method.
According to GlobalData’s lead banking and payments analyst Ravi Sharma, the rise in prominence of the short-term consumer financing model has been spurred on by COVID-19 over the past two years, given the adverse effect it had on disposable income.
He said: “The increasing demand for credit coupled with growing consumer preference for e-commerce has made the BNPL service as one of the preferred short-term borrowing tools among the consumers.”
In a recent survey from Global Data, the “2021 Financial Services Consumer Survey”, more than one-third of Australian respondents reported using a BNPL service to buy goods and services within the previous six months.
This number is set to climb, with Mr Sharma forecasting that as the country continues to recover from COVID-19, BNPL presents “huge potential” in Australia.
He outlined: “Rising consumer spending, high consumer preference for electronic payments, and proliferation of BNPL providers will support growth of BNPL business model.”
That proportion of customers using the service put Australians above South Koreans, Germans, and Brits, but behind France, Singapore, and Hong Kong.
The United States of America is leading the way when it comes to BNPL use. More than one in two respondents surveyed from the USA indicated they had used BNPL in a transaction within the previous six-month period.
The rise in alternative financing models is a topical issue, with the federal government previously proposing more oversight of the BNPL industry, pending the outcome of a consultation period set to take until the end of 2022.
Even so, here are five reasons “the future is bright” for BNPL in the real estate space.