In-Store Checkout Set to Drive Buy Now Pay Later Growth

With 14% of online shoppers — more than 28 million U.S. adults — using buy now, pay later (BNPL) to pay for a purchase at least once in the last 12 months, there isn’t any question that the payment option has become mainstream.

Tristan Roffey, vice president and group head of global strategy at Blackhawk Network, told PYMNTS that BNPL is “quickly becoming a daily tool for many consumers.” As such, they are beginning to expect that brick-and-mortar merchants will offer it.

For the brick-and-mortar merchants themselves, it represents a chance to cement customer loyalty when they’re facing more competitive pressure than ever.

“This opens up a massive opportunity for retailers that rely heavily on in-store shopping because it really allows them to compete more effectively with merchants that might have a more established online presence and may already be offering their consumer some form of buy now, pay later,” Roffey said.

PYMNTS’ research shows that nearly 22% of consumers say the availability of BNPL options would encourage them to shop at physical stores, including a quarter of Gen X shoppers, 31% of bridge millennials, 29% of millennials and 23% of Generation Z. Roffey also noted that a Blackhawk Network survey found that 63% of consumers are more likely to shop at a retailer if it accepts their preferred digital payments.

See: 5,000 ‘Need It Now’ Consumers Tell PYMNTS What They Expect, Value Most From Retailers

“Millennials and Gen Z are quickly upping the adoption of buy now, pay later, and for a merchant, they’re really important demographics influencing retail and payment trends right now,” Roffey said.

Additionally, with prices rising across the board, he added that BNPL can be an appealing payment option for “debit-centric users who might not want a credit card but may need to pantry-load, or who  want to purchase a more expensive item and they may need a credit facility to do that.”

Roffey noted that BNPL also allows people to pay on terms that align more closely with their paychecks and help them avoid revolving debt. Grocers that have adopted BNPL, Roffey told PYMNTS, have seen in-store basket sizes exceeding $105, a 50% increase from a typical grocery purchase.

“Consumers are really demanding more flexibility in the way that they shop and pay, whether it’s online or in-store,” Roffey said, adding that the shift in consumer spending to online over the last 20 months has “really accelerated” adoption of BNPL.

Related: Zip Debuts In-Store BNPL Payment Option in UK

Earlier this year, Blackhawk partnered with BNPL firm Zip, allowing consumers to use the financing solution to buy gift cards from the more than 500 leading with whom merchants Blackhawk works. Roffey said that the newly minted partnership is crucial this holiday season, as gift cards are expected to be particularly popular.

“Given everything that’s going on with some of the supply chain shortages out there … we’re forecasting to see record gift card growth this year,” Roffey said.

Read more: Inventory Shortages Could Make Holiday 2021 The Year of the Gift Card

The Rise of QR Codes

The key to bringing BNPL and other digital options into stores, Roffey told PYMNTS, is QR codes, which are set to become a “daily use payment form factor,” particularly for restaurants. Part of Blackhawk’s partnership with Zip will see the two companies try to make it easier for merchants to integrate BNPL at the point of sale through in-store QR codes.

Over 18% of consumers say the availability of QR codes would make them more likely to shop at a physical store, including one-quarter of Gen Z shoppers and 22% of millennials.

See also: QR Codes Key To Unlocking Billions Trapped In Unused Gift Cards

Beyond BNPL

BNPL, of course, is far from the only innovation shaking up payments right now, and in the coming years, Roffey said he expects to see more digital wallet utilization in-store.

Additionally, he said, consumers are “increasingly looking for ways to check out without human interaction,” whether it’s through an in-app experience or via self-checkout kiosks. This is a potential boon for merchants struggling to find labor.

Related: Labor Shortages Continue as Bigger Paychecks Fail to Lure People Back to Work

“It’s just meeting consumers where they already are,” Roffey said. “And the reality is, if you’re not offering consumers the ability to pay the way that they want to, you’re potentially at risk of losing that customer to a competitor.”