TransUnion: Consumers with point-of-sale loans tend to use other forms of credit more responsibly
The study, Understand the
BNPL and POS funding has become a popular offering among younger consumers, with Gen Z and Millennials (ages 18-30) making up the largest breakdown of the consumer population who applied for POS funding over the years. of the study period (32%). Bridge Millennials (31-40) and younger Gen X (41-50) were also more likely to favor BNPL / POS, with 78% of all POS funding applicants being between the ages of 18 and 50.
BNPL and POS offers do not appear to have a major impact on the consumer’s use of other forms of credit. Indeed, BNPL / POS candidates generally use other forms of credit more than the rest of the population.
“Consumers who can use point-of-sale financing are not doing so at the expense of traditional credit. We have seen consumers who have applied for point-of-sale financing accumulate balances on bank and retail cards, and request new credit at higher levels than the general credit population. These new forms of financing increase the credit pie – opening up more opportunities for consumers and lenders, ”said
Ease of application and predictable payment plans allow consumers to spread smaller payments over a period of time to afford larger tickets. A
Consumers applying for POS financing are an attractive segment for acquisition growth
The study looked at the credit profiles of over 6 million POS funding applicants (defined as consumers with a request for information about
The results showed that POS financing applicants have more credit products, such as credit cards, retail cards, and installment loans in their wallets compared to the general credit workforce. Credit cards were the most popular among POS financing seekers (89%), followed by retail cards (75%) and car loans (73%).
POS funding applicants were also more likely to have a greater number of cards in their wallet compared to the general credit workforce. Card usage levels, however, were very similar across all risk levels, with most consumers having open-to-purchase cards available on their cards. This suggests that consumers are actively seeking POS financing even though they could have made the purchase on a card.
Consumers who apply for POS financing are also more likely to accumulate or maintain credit card balances in the months following their application than the general credit workforce, which refutes the hypothesis that BNPL / POS decrease card balances.
|Bank card||Retail card|
|Percentage||Point of sale financing
|Point of sale financing
Consumers who use BNPL / POS financing, however, still perform well and are on par with the general credit workforce when it comes to delinquency. The study found that while applicants for POS financing score slightly lower on credit cards, they outperform the non-POS segment on unsecured personal loans. The good delinquency rates demonstrated by POS funding applicants make these consumers an attractive segment to target for acquisition growth.
“As more and more consumers participate in point-of-sale financing, these consumers still have healthy delinquency rates on traditional products and are very engaged in the credit market,” Pagel said. “This highlights an opportunity for traditional lenders and point-of-sale lenders to provide more diverse credit solutions to this attractive segment. “
For more information on the TransUnion study, please download the Understanding the Understanding the
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