The decision of Amazon to halt transactions using Visa credit cards in the UK may well accelerate the growth of the BNPL sector – as credit card transactions are already on the decline according to research by BNPL platform Butter.
Butter revealed that the emergence of the BNPL sector has already led to a decline in credit card transactions, as more and more consumers opt for the emerging payment journey, which has grown exponentially over the pandemic.
Timothy Davis, Co-Founder and CEO of Butter, commented: “Buy Now Pay Later is just another option open to the consumer when it comes to how they want to transact and we’re never going to see it fully replace the direct purchases made via a debit card or with cash.
“However, it’s abundantly clear that the greater flexibility, transparency and accessibility it offers over purchasing with a credit card, for example, resonates with today’s consumers. So it’s no coincidence that credit card purchases have declined while the BNPL space has gone from strength to strength.”
He added: “For many, credit cards are a rabbit hole of additional charges, confusing bills and uncertainty.
“Today’s consumer wants to know what they’re borrowing, what it will cost them to do so and a clear picture of their repayment time frame and the BNPL sector offers that while also allowing them to spread the cost of a purchase to suit their individual financial situation.
“It also seems as though credit card costs no longer work for retailers and while Amazon has been the first to announce their removal as a route to transacting, we could see many more soon follow suit.”
Furthermore, the Buy Now Pay Later space has expanded dramatically in a very short period of time. In fact, it’s estimated that the value of transactions taking place via BNPL platforms has climbed 65% during the pandemic, hitting £6.4bn in 2020 alone.
This has been driven by a user base that has almost doubled in size, climbing from 5.8 million users to 10.1 million – a 75% increase.
As a result, it’s thought that the BNPL market now accounts for 5% of all e-commerce transactions, a 2% increase in just 12 months.
Subsequently, it has impacted the traditional payment journey, with it creating a deeper desire for alternative payment methods and more accommodating user experiences.
