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  • Writer's pictureKevin Leahy

Is BNPL Safe? Is GNPL Safe?

It’s not just millennials, it’s not just Gen Z – across generations, nearly 60% of consumers say they prefer to Buy Now, Pay Later (BNPL) over credit cards, according to PYMNTS, the global leader for payment data and insights.

Is Buy Now, Pay Later Safe?

Is BNPL Healthy? Is BNPL Safe?

As more households gain financial literacy, they are questioning long-held assumptions when it comes to money. For example, fewer and fewer people are using credit cards, a trend that's accelerated since the beginning of the pandemic, reports the Consumer Financial Protection Bureau.

The truth is that it's the savvy consumer who considers their financial situation and budget that typically commits to purchasing through a BNPL option. In fact, PYMNTS found that the top reason people prefer BNPL over credit cards is that they see BNPL as the safer option – trusting transparent agreements, set payments, and ease of service. This preference is especially pronounced among younger consumers, who watched their parents struggle with credit card debt amid the 2008 economic recession.

Closely tied to BNPL is the question if this payment method is allowing people to spend money they can't afford. Are BNPL consumers people who credit cards won't approve because they're seen as too risky? These are valid concerns, but the data shows a different picture.

Experian, a multinational data analytics and consumer credit reporting company, researched this claim and found that 80% of BNPL consumers also have active credit cards. Furthermore, PYMNTS finds that a mere 16% of BNPL earn an annual income below $50,000. In fact, most BNPL consumers earn more than $100,000 annually.

"Experian has observed that, in payments, some BNPL customers outperform customers who share the same credit score suggesting that these BNPL users are currently less likely to fall into arrears. This may be because use of recurring payment or debit cards as a payment method limits consumers’ ability to default on payment, improving their credit performance." – Experian

Clearly, there are a number of myths associated with BNPL that are based on assumptions, rather than what's actually happening with consumer behavior.

Why is BNPL an Option?

BNPL is emerging as more than a type of payment, but a flexible payment option that's associated with lifestyle. For example, Millennials and Gen Zers align everything they do with their values – shopping, their careers, charitable giving, managing personal finances, the list goes on.

The common thread that exists with Millennials and Gen Zers around BNPL is that it empowers them with the most spending power in the least risky way. This is important, because knowing what we do about how responsible these generations are with personal finances, they use BNPL to do more, with less risk.

As a result, BNPL is in a revolutionary growth phase. Forecasters estimate that BNPL reached $76.20 billion in US payments volume by the end of 2022, according to Insider Intelligence, as adoption continues to normalize each year.

Additionally, BNPL is transitioning from BNPL 1.0 to BNPL 2.0, which Givzey is a prime example of. Rather than offering very broad BNPL solutions, companies such as Givzey are inventing new business models built for very specific sectors. In the case of Givzey, we provide Give Now, Pay Later (GNPL) flexible giving solutions to empower donors and remove giving barriers for fundraisers in the nonprofit sector.

BNPL 2.0: Give Now, Pay Later (GNPL)

All of this is great when it comes to consumers and goods. But how does BNPL relate to fundraising? Givzey is the first company to introduce Give Now, Pay Later (GNPL) for charitable donations. Rather than building a credit product to solve fundraising incentives, Givzey built its patent-pending GNPL flexible giving solutions to remove donor-giving barriers and bring immediate and timely capital to nonprofit organizations, colleges and universities, and healthcare institutions.

And the GNPL boom has been especially impactful for young donors' lifestyles, which align personal values across every aspect of their lives. Not only do millennial and GenZ donors naturally feel the motivation to give to causes that they believe in, but they also look to make financial commitments in ways that align with their personal values. GNPL's convenient, transparent, and trustable process further connects the values that drive Millennials and Gen Zers as donors.

More flexible giving options for donors, no matter where they sit in terms of pipeline or the overall giving pyramid, increases the likelihood of giving regularly because they remove giving barriers from the donor journey.

If you’re interested to learn more about Givzey and our patent-pending GNPL flexible giving solutions for your donors, connect with us.

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