U.S. consumers spent about $38 billion online between Thanksgiving and Cyber Monday this year, and more of that spending than ever was facilitated using buy now, pay later (BNPL) services. 

BNPL usage reached record levels on Cyber Monday, accounting for $940 million of the total $12.4 billion spent, according to Adobe. That’s a 42.5% increase year over year, on top of 85% it grew on Cyber Monday 2022. 

BNPL users also displayed some changing habits, using the payment method on carts that had 11% more items, on average, than last year. 

The payment service was used for $8.3 billion in online orders between Nov. 1 and Nov. 27, according to Adobe, up 17% year over year. November 2023 is projected to be the biggest month to date for BNPL spending.

What is buy now, pay later (BNPL)?

BNPL is a short-term financing option offered on the online checkout page of some retailers. It allows shoppers to spread out the payment for a purchase over a specified period. Consumers apply for the financing option with whichever vendor the retailer uses during checkout. Then, customers pay the smaller payments over the course of several months and without an interest fee. Instead, retailers pay the BNPL vendor a service fee per transaction, which typically ranges from 2% to 8%. Many of the large vendors pay the merchant the full order amount right away. Then, they don’t have to wait for the customer to pay each installment to receive the payment.

BNPL loans can be more attractive to consumers than traditional credit cards because they generally do not charge interest over the period of the loan. Consumers can qualify for them without a hard credit check that could show up on a credit report. Shoppers can pay for the installments using a credit card, debit card or bank account.    

Which retailers use buy now, pay later?

54% of Digital Commerce 360’s ranking of the Top 1000 online retailers offer some version of this payment type. That’s up from 45.8% of Top 1000 retailers in 2022, 45.7% in 2021, and 28.2% in 2020. And the biggest retailers are joining in, with Amazon.com Inc. adding BNPL through vendor Affirm Inc. in 2021 and expanding it to other retailers through Amazon Pay this year. Walmart Inc. also uses Affirm, and Apple Inc. launched its own BNPL version in March. Amazon, Walmart, and Apple are the top three retailers, respectively, in the Top 1000.

While more than half of the Top 1000 retailers offer buy now, pay later, the top retailers differ in which  pay-in-installment vendor they offer. 18.3% of Top 1000 retailers offer PayPal credit, one of PayPal’s versions of BNPL, 14.7% offer Affirm, 13.3% offer Klarna, and 11.9% offer AfterPay, with other services coming in behind. 18.9% of retailers offer multiple BNPL vendors.  

Jewelry, automotive parts, and apparel retailers are the most likely to offer BNPL, while food and beverage companies are the least likely, according to Top 1000 data.    

Other BNPL insights from Cyber 5

BNPL payments vendor Klarna said orders from U.S. consumers increased 29.5% on Black Friday over the previous year. Klarna customers were most likely to use the service to purchase consumer electronics, the vendor said in a Cyber Monday data report. Headphone purchases using Klarna were up 465.4% over the previous Monday, and computer monitors were up 276.9%.

BNPL vendor Zip said purchases on Cyber Monday using the service grew 21% year over year, and were up 82% over a typical shopping day. Zip recorded a spike in uses between 11 p.m. and midnight Eastern time, up 195% over an average day. 82% of purchases with Zip were made online, the vendor said. Black Friday sales also grew, up 26% over 2022 and 103% over an average shopping day. Like Klarna, Zip reported consumer electronics were the fastest-growing category, up 215%. That was followed by jewelry and accessories at 124%, and fashion at 76%. 

Zip users were most likely to shop at Amazon and Walmart, but spent the most money at Best Buy, Newegg, Fashion Nova, and Shein, it shared in a report.

Web analytics firm Similarweb reported in a Nov. 28 release that traffic to BNPL services grew 32% year over year.

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