Millions of U.S. consumers have used Buy Now, Pay Later (BNPL) loans with 89% stating they are satisfied or very satisfied with the credit product. A new survey from TransUnion also revealed that 85% of BNPL users would recommend such loans to others.

The research, conducted among 1,200 U.S. consumers in the second quarter of 2024, explored the general usage and behavior of consumers around BNPL loans. BNPL is an installment loan established at the point of sale for the purpose of financing a one-time, unsecured retail transaction. It allows consumers to finance a purchase with multiple, equal payments instead of one lump sum.

More than 100 million consumers have used BNPL and the number of users is expected to grow as TransUnion’s research found nearly 40% of those who haven’t used these loans are likely or very likely to use them in the future. Notably, a higher 53% of non-users would be likely or very likely to use BNPL if it had the potential to have a positive impact on credit scores.

“TransUnion is leading the effort with lenders to facilitate and accelerate BNPL credit reporting to create visibility to this growing segment of the financial services industry. Consumers deserve to have their BNPL credit included in their credit history, which could lead to more access to credit for a generation of consumers who have embraced BNPL as an alternative to traditional borrowing,” said Jason Laky, executive vice president and head of financial services at TransUnion. “Our research indicates that the BNPL industry is attracting a large base of consumers who say that the ability to easily track payments and balances attracts them to these products – once they are able to see their BNPL loans in their credit file, that will be even easier.”

TransUnion launched new capabilities to accurately capture and reflect the unique features of BNPL loans in 2022. The new methodology will account for the high-frequency nature of such loans. The survey findings underscore the high usage patterns of BNPL loans with 80% of users utilizing BNPL more than once a year. This is very different from how current scores expect products like installment loans to be used, so the changes were necessary.

Based on a TransUnion Q2 2024 Consumer Pulse study that found 50% of adult Americans have used BNPL loans at least once.

“The new reporting methodology will allow models to give consumers credit for making on-time payments on their BNPL loans without penalizing them for using them more frequently than typical installment products,” said Liz Pagel, senior vice president and head of consumer lending at TransUnion. “Today, three in four BNPL users believe that using BNPL will impact their credit scores positively.”

As more and more consumers across different age ranges and credit scores use BNPL products responsibly, the loans’ inclusion on the credit file will bring in more consumers who are currently either left out of the system entirely or who are struggling to rebuild credit.

The survey also reflected a lack of consumer understanding of the current state of BNPL bureau reporting. Approximately three in 10 consumers (28%) who use BNPL cited being concerned about its impact on credit scores. Today, the vast majority of BNPL loans are not reported to the CRAs. 

Looking at both users and non-users of BNPL products, the sentiment around credit bureau reporting was positive:

• Over half of BNPL users across high-, medium-, and low-income tiers ranked the ability to add payment history to build credit scores as an important or very important feature (low income -  56%, medium - 61%, high - 64%)
• 86% of BNPL users would be very likely or likely to use BNPL products if it could positively impact credit scores.
• 53% of non-users said that they would be likely or very likely to use BNPL products if it could have a positive impact on credit scores.

“One of the key takeaways from the research is that BNPL is here to stay. Consumers find value in the product and they overwhelmingly like the experience of using it. While the financial services industry is clamoring for visibility into BNPL data, consumers see the benefits of credit reporting as well. This growing industry could become a force for financial inclusion as the data begins to enter the credit reporting ecosystem,” concluded Pagel.