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October 2022

Buy Now, Pay Later Tracker® Series

Unlocking The True

Potential Of BNPL

For Services

• BNPL Expands Access To

Services — p. 04

• Medicine, Education

Are The New BNPL

Applications — p. 10

• Breaking Down BNPL

Habits — p. 14

• Merchant Halts Discounts

After BNPL Offering

— p. 16

AUGUST 2022
Buy Now, Pay Later

Tracker® Series

Read the previous edition

2 | By Now, Pay Later Tracker® Series

Acknowledgment
The Buy Now, Pay Later Tracker® Series is produced in collaboration
with Splitit, and PYMNTS is grateful for the company’s support and
insight. PYMNTS retains full editorial control over the
following findings, methodology and data analysis.

What’s Inside

Services Take The Lead For New BNPL Use Cases

Consumers are leveraging installment payments to access

services such as travel, home remodeling or education.

18 Breaking Down BNPL Habits
Customers are increasingly leveraging BNPL for services, and

expensive items are still on top.

06 BNPL Expands Access To Services
PYMNTS explores the latest worldwide BNPL headlines,

including how BNPL for dental services expands affordability

and why one in three consumers leveraged BNPL for

back-to-school shopping.

20 Learn From An Education Provider How

To Save With BNPL

Heidi Hillis, education coach at Fortuna Admissions, explains

how the company reduced administrative costs and discounts

by using BNPL.

14 BNPL Providers Take Aim At Medical And

Education Payments

Americans are branching out to more unusual BNPL use

cases, such as education and medicine.

24 Companies To Watch

Kontempo, Letus and Tabby explore exciting new

BNPL use cases.

26 Medicine And Education Are Next
Education and healthcare are primed to be the next frontiers

for BNPL services.

30 About
Information on PYMNTS and Splitit.

4 | Buy Now, Pay Later Tracker® Series

Need To Know

Services Take The

Lead For New BNPL

Use Cases

Merchandise is not the only thing customers are looking to

make more readily affordable through buy now, pay later

(BNPL): Education, medicine, dentistry and a host of other

services are following close behind as the current infla-

tion crisis exacerbates ongoing cost concerns in all parts of

daily life. BNPL has become an everyday-purchase solution

for millions of consumers, making its extension to new use

cases a logical move to solve a broad spectrum of financial

issues.

47%

Share of consumers who are aware of BNPL and

would use it for expensive, one-time purchases.

29%

Portion of consumers who would leverage

BNPL to pay for medical bil s.

24%

Share of consumers who would use BNPL

for other purchases.

6 | Buy Now, Pay Later Tracker® Series

Although BNPL offers all consumers financial flexibility, the

current economy is becoming challenging for all income

classes. Forty-three percent of consumers said they would

be interested in leveraging BNPL for services such as travel,

another 43% would use it for home remodeling services,

42% would use it for medicine and prescriptions and 38%

would use it for education and certifications. Consumers’

reasons for using BNPL for services varied greatly.

Need To Know

41%

Share of consumers who said BNPL is better

than a personal loan

34%

Share of consumers who said they liked

having a definite end to payment terms

26%

Portion of consumers who used BNPL so their

credit would be available for other purchases

BNPL services are

useful for consumers

of all economic strata

8 | Buy Now, Pay Later Tracker® Series

BNPL For Dentistry,

Education, Fighting

Inflation And

Back-To-School

Shopping

BNPL systems have long been used for retail shopping,

but there are dozens of new use cases popping up by the

day. One important application is dentistry, to which BNPL

provider CareCredit plans to extend its financing services.

PYMNTS’ research found that one-third of United States

consumers have gone without medical care, and another

study found that 74 million Americans lack dental cover-

age, with dental offices all over the country turning away

hundreds of potential patients each month who cannot

afford their services.

51% 0000000047

Used BNPL for its convenient payment experience

48% 0000000047

Leveraged BNPL due to tight finances.

44% 0000000047

Used BNPL to compensate for increased product costs.

News And Trends

10 | Buy Now, Pay Later Tracker® Series

Healthcare affordability has been a long-standing issue

in the U.S., which, unlike the vast majority of industrial-

ized nations, lacks a widespread public health system.

Individuals in the U.S. currently possess a total of more

than $88 billion in medical debt, and many individuals fear

the costs of healthcare more than the actual procedures.

BNPL companies are looking to fill this gap, offering cus-

tomers the ability to finance their health procedures in

the same way they would retail purchases. In this regard,

Splitit, a BNPL provider, partnered with medical payments

firm DOCPAY, to increase the number of healthcare deals

by approximately 50% over the past six months.

BNPL providers break

into the medical sector

38% OF SHOPPERS PLAN TO SPEND LESS THIS HOLIDAY SEASON DUE
TO INFLATION, BUT BNPL COULD HELP
Financial woes have extended beyond medical payments

to everyday shopping as well, and the upcoming holiday

season could look somewhat dimmer than usual, thanks

to inflation. This has caused prices to skyrocket and has

made many customers change their spending habits.

BNPL services are helping many shoppers meet their retail

goals this holiday season, as this past year has demon-

strated, with 64% of eCommerce customers saying they

have used BNPL more often in the last six months. They

had a number of reasons for doing so.

of consumers said

they have reduced their

spending on nonessential

items over the past

six months.

of consumers said they

spent less on summer

vacations, and 49%

said they were reducing

travel expenses.

of consumers said

they would spend less

during their holiday

shopping this year.

67%

40%

38%

News And Trends

12 | Buy Now, Pay Later Tracker® Series

One in three consumers

are leveraging BNPL

for back-to-school

shopping

BNPL has also been playing a role in other traditional shop-

ping seasons. A recent survey found that 37% of consumers

plan to or have used BNPL to finance their back-to-school

shopping, with 55% of consumers planning to spend more

this year due to inflation. Inflation has affected custom-

ers in a variety of other ways as well. Shifts in shopping

behavior due to inflation were much more pronounced

among students shopping for themselves than among par-

ents shopping for their children, as students typically have

less discretionary spending power than adults. Almost

two-thirds of students who leveraged BNPL did so to buy

books and other small-scale school items, while 52% said

they used BNPL to purchase a single expensive school item,

such as a computer.

Table 1:
Adjusted spending due to inflation

19%

23%

36%

30%

32%

38%

35%

42%

Parents shopping for their children

Students shopping for themselves

Buying cheaper

versions of

usual items

Buying less of

some items

Spending more

to buy usual

items

Stopped buying

some items

Highest
Lowest

Source: Author unknown. More Than One in Three Consumers Using Buy Now Pay Later Loans for Back-to-School Shopping.

GlobeNewswire. 2022. https://www.globenewswire.com/news-release/2022/08/23/2502930/0/en/More-Than-One-in-Three-

Consumers-Using-Buy-Now-Pay-Later-Loans-for-Back-to-School-Shopping.html. Accessed October 2022.

News And Trends

14 | Buy Now, Pay Later Tracker® Series

BNPL Providers Take

Aim At Medical And

Education Payments

BNPL has become a part of everyday life for American con-

sumers, and its popularity is still expanding. Twenty-nine

million consumers in the U.S. leveraged BNPL to make pur-

chases in 2021, and 59% of consumers said they would be

willing to use third-party BNPL solutions.

Americans are branching out to more unusual BNPL use

cases, such as education and medicine. One of the primary

draws of BNPL is its lack of interest rates as long as the

payments are made on time, and this makes it an attractive

option for big-ticket purchases beyond just merchandise.

This month, PYMNTS explores how consumers leverage

BNPL to pay for services rather than retail and the bene-

fits of doing so.

Medical procedures, education and prescriptions are some

of the most popular BNPL use cases. A recent PYMNTS

study found that 59% of all U.S. consumers are living pay-

check to paycheck, including 43% of those earning more

than $100,000 per year. Forty-three percent of these

paycheck-to-paycheck consumers said they would be

interested in leveraging BNPL for out-of-pocket medical

procedures, 43% would use it for home remodeling ser-

vices, 42% would use it for medicine and prescriptions and

38% would use it for education and certifications.

Figure 1:
High-value services consumers would like to purchase with BNPL options

Share who would be very or extremely interested in using BNPL options to make specific high-value

service purchases, by financial lifestyle

20.4%

26.5%

43.8%

0000000000

Travel and vacation services

17.7%

29.7%

42.8%

0000000000

Out-of-pocket medical procedures

19.6%

25.1%

42.7%

0000000000

Home remodeling services

Source: PYMNTS

The Next BNPL Horizon: Expanding Access To High-Value Services, May 2021

N = 2,211: Surveyed U.S. consumers, fielded June 23, 2021 – June 27, 2021

Do not live paycheck to paycheck
Live paycheck to paycheck but comfortable
Live paycheck to paycheck with difficulty

16.4%

21.8%

38.1%

0000000000

Education and certifications

11.5%

22.4%

42.3%

0000000000

Medicine and prescriptions

12.1%

16.4%

37.4%

0000000000

Luxury restaurants

PYMNTS Intel igence

16 | Buy Now, Pay Later Tracker® Series

All told, 43% of consumers would prefer to use BNPL for

high-value purchases, translating to approximately 111 mil-

lion consumers. Eighty-three percent of those who agreed

with this statement preferred BNPL over a credit card, with

34% saying they liked having a finite end to the payment

terms, for example.

BNPL providers are exploring a number of new products to

improve customers’ access to these services. Digital edu-

cation merchant upGrad, for example, recently partnered

with a BNPL provider to offer installment payments. The

global eLearning market was worth $215 billion in 2021 and

it is expected to grow 13% annually. BNPL provider Splitit

has seen growth in the segment triple in the last few years.

Its data shows students paid $1,500 over 8.5 installments

in 2022, up from $1,240 over 7.3 installments last year.

Overseas customers are also exploring BNPL for access

to services. Education payments are a growing concern in

India, for example, where the eLearning market is valued at

more than $1.96 billion, yet just 3% of the population has

access to traditional credit services. BNPL companies aim

to take advantage of this funding gap as well as the fact

that 48% of students are currently paying for their educa-

tion through installment payments. These companies hope

to harness these individuals’ familiarity with installment

payments to introduce them to BNPL.

PYMNTS Intel igence

18 | Buy Now, Pay Later Tracker® Series

Breaking Down

BNPL Habits

Consumers can largely be divided into three groups based

on their access to credit: “worry-free,” or those with good

credit or access to credit; “second chance,” or those who

have blemishes on their credit profiles; and “shut out,”

or those who have been excluded from conventional

credit access.

Worry-free customers leverage BNPL for a variety of rea-

sons. Sixty-two percent of worry-free consumers familiar

with BNPL believe it can help them buy things they want

without overspending, for example, while 55% said it could

allow them to make purchases more frequently.

TABLE 2:

Using BNPL to pay expenses

Share of consumers interested in using BNPL to pay for select expenses, by persona

55.3%

38.5%

32.9%

25.5%

22.2%

19.4%

10.1%

52.9%

37.4%

35.0%

39.0%

23.9%

24.7%

7.6%

47.1%

29.2%

20.8%

17.6%

14.2%

12.0%

24.2%

43.3%

24.0%

13.9%

11.5%

9.6%

6.7%

32.5%

Excessive, one-time retail purchases

Medical bill

Groceries

Monthly utility bills

Insurance bills

Rent or mortgage payments

Other

Worry-free

Second chance

Shut out

TOTAL

Source: PYMNTS

The New Credit Model: Why Financially Worry-Free Consumers Still Want Alternatives To Traditional Credit, December 2021

N = 7,024: Surveyed U.S. consumers, fielded April 16, 2021 – April 26, 2021, and April 28, 2021 – May 10, 2021

Chart Of The Month

20 | Buy Now, Pay Later Tracker® Series

Learn From An

Education Provider How

To Save With BNPL

AN INTERVIEW WITH HEIDI HILLIS, EXPERT COACH AT FORTUNA
ADMISSIONS, ON HOW BNPL IS CHANGING THE EDUCATION FIELD

Education has long been an impetus for taking out per-

sonal loans, including those for tuition, books and room

and board, making it a natural fit for BNPL. Even education

players outside the schools themselves are dipping into

BNPL, including Fortuna Admissions, a consulting and coun-

seling service for prospective business school applicants.

“Our clients are generally professionals, and our packages

that we sell are pretty high-ticket, so customers often paid

for them over a period of three to six months, and we were

managing it ourselves by charging them in three invoices.

But that became very burdensome for us to handle, and

we found Splitit to help us handle client payments.”

HEIDI HILLIS

Expert Coach

We used to do a fair amount of

discounting so we would be able to

close the sale, but since we’ve been

[leveraging BNPL], we do hardly any

discounting. We just say we will offer

you interest-free payments, and that

seems to be enough for customers.

And on the cost side, it has reduced

our expenditures significantly by being

able to have someone else manage

the col ections process for us.

Insider POV

22 | Buy Now, Pay Later Tracker® Series

Implementing BNPL allowed Fortuna to improve its prof-

its in two different ways. Not only did the lack of interest

payments allow the company to drop its discounts and

still offer an appealing value proposition. Outsourcing the

payments to a third party also enabled it to save admin-

istrative costs that were formerly spent on managing the

company’s own installment payments system.

Implementing BNPL came with its own set of challenges,

however, particularly when it came to customers from

certain countries. These countries’ banking systems often

mistakenly identified users’ BNPL payments as fraudulent

due to their financial laws, making BNPL difficult to lever-

age. Fortuna helped develop an innovative solution to work

around these roadblocks, however.

Currently, 55% of Fortuna’s customers use BNPL, accord-

ing to Hillis. Continued ease of use in the education field

could improve this rate across the entire industry.

With BNPL, sometimes [customers] have to

have the entire amount available on their

credit card, and some banks have flagged

the withdrawals as fraud. But we’ve worked

with Splitit to al ow people to use a debit card

that’s not preauthorized, and then they’re just

basical y managing a payment scheme for us.

Insider POV

24 | Buy Now, Pay Later Tracker® Series

Payments

Providers Bet Big

On BNPL Around

The World

BNPL startup Kontempo recently announced that it had

raised a $30 million seed round in part of a bid to enter

the new business-to-business (B2B) BNPL space. Although

most B2B payments are spread out over a period of time,

such as net 30-day terms, high fees and delays are fre-

quent. The entry of consumer-style BNPL into this area

could potentially be a game-changer in the future.

Cloud-based payment platform Letus is also entering

the BNPL market. This will allow customers to make

rental payments, including security deposits, on a BNPL

basis — another interesting use case that could have

long-lasting ramifications for the American real-estate and

rental markets.

United Arab Emirates-based online payments provider

Tabby recently secured $150 million in debt financing to

expand in the Middle East and North Africa region. This

could be an exciting new market for BNPL due to the lack

of traditional credit options: In Saudi Arabia, for example,

less than 20% of consumers have a credit card.

Companies To Watch

26 | Buy Now, Pay Later Tracker® Series

Q: WHAT IS DRIVING THE GROWTH OF BNPL IN SERVICES?
A: One of the biggest reasons is the services sector is finally

catching up with eCommerce retail from a technology per-

spective. Consumers have proven the BNPL model works in

eCommerce, and we’re starting to see it grow with in-person

transactions, but it takes time to translate a payment tech-

nology into sectors traditionally slower to adopt newer

technologies. Plus, we’re starting to see more options that

fit the larger ticket sizes. The “Pay-in-4” approach of legacy

BNPL lenders works well when the total ticket price is a

few hundred dollars, but it becomes a bit untenable when

you’re talking about purchases over $1,000. We expect the

interest and growth of BNPL in services to grow in 2023

as merchants become more comfortable with the options

and continued economic pressures have consumers look-

ing for more flexible payment options.

Consumers have proven

the BNPL model works in

eCommerce and we’re

starting to see it grow with

in-person transactions, but

it takes time to translate a

payment technology into

sectors traditional y slower

to adopt newer technologies.

NANDAN SHETH

CEO

Medicine And

Education

Are Next

What's Next?

28 | Buy Now, Pay Later Tracker® Series

Q: WHAT SERVICE SECTORS ARE PRIMED FOR THE BIGGEST GAINS IN
2023?
A: I expect to see growth across most service sectors:

We are already seeing rising demand in automotive, home,

education and healthcare and expect this to continue over

the next year. Macroeconomic pressures have consum-

ers stretching their budgets and reevaluating what they’re

spending on. These areas are critical to most people and

there is strong interest in an option where you can pay

in installments without additional interest or fees and

without having to take out a new loan. We’re also seeing

incredible growth potential with [independent software

vendors] that specialize in these areas providing an easier

pathway for businesses to offer installments.

Q: HOW WILL LOOMING REGULATIONS FROM THE CONSUMER
FINANCIAL PROTECTION BUREAU IMPACT BUSINESSES LOOKING TO
ADOPT BNPL?
A: For those looking to a BNPL lender providing new

consumer loans, you can expect to see some negative con-

sequences, especially around approval rates. Regulation

will force BNPL lenders to implement more stringent

underwriting or to decrease spending limits. Because many

of their customers have lower credit scores, often living

paycheck to paycheck, you can expect approval rates to

fall and order size to decrease, negatively impacting the

[return on investment] on the merchant investment in leg-

acy BNPL. However, regulation is a big win for merchants

who have seen their relationships with consumers eroding,

with BNPL providers harvesting their shopper data for their

gain. The regulations will help merchants to protect their

customer acquisition investment, increase customer loy-

alty and overall lifetime customer value and provide more

control and oversight on customer data.

What's Next?

30 | Buy Now, Pay Later Tracker® Series

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Disclaimer

PYMNTS is where the best minds and the best content meet
on the web to learn about “What’s Next” in payments and
commerce. Our interactive platform is reinventing the way
in which companies in payments share relevant information
about the initiatives that shape the future of this dynamic
sector and make news. Our data and analytics team includes
economists, data scientists and industry analysts who work
with companies to measure and quantify the innovation that
is at the cutting edge of this new world.

Splitit powers the next generation of BNPL through its
merchant-branded Installments as a Service platform. Splitit
is solving the challenges business face with legacy BNPL while
unlocking BNPL at the point of sale for card networks, issuers
and acquirers all through a single network API.

Splitit’s Installments as a Service platform mitigates issues
with legacy BNPL such as the declining conversion funnel,
clutter at the checkout and a lack of control of the merchant’s
customer experience while also putting the power back in
the hands of merchants to nurture and retain customers,
drive conversion and increase average order value. Splitit’s
white-label BNPL solution is the easiest installment option
for merchants to adopt, integrate and operate while delivering
an uncluttered, simplified experience embedded into their
existing purchase flows. With no applications, redirects or
new loans, Splitit is one of the most responsible installment
payment options for customers.

We are interested in your feedback on this report. If you have
questions or comments, or if you would like to subscribe to
this report, please email us at feedback@pymnts.com.

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