Via the excellent George Theranou at UBS:
Sales in Australia using a BuyNowPayLater (BNPL) payment method have boomed from ~$2bn in 2017, to ~$7bn in 2019, & will likely surge further to ~$12bn in 2021 – before growth likely normalises to a still strong ~double-digit pace thereafter.
BNPL’s impact on retail sales is likely to remain material. In 2019, the expected ~$3bn y/y rise in sales via BNPL is likely to be larger than the rise in RXF; while in 2021, the BNPL share of the $ y/y increase in RFX will likely still be ~50%. However, this clearly overstates how much BNPL incrementally ‘adds’ (i.e. contributes) to retail. UBS Evidence Lab survey estimated 27% of BNPL customers said the service was key to their decision to shop at a retailer. Hence, even assuming all of this this 27% represents incremental new spending, we estimate BNPL could ‘add’ a material ~½%pt to RXF, but <¼%pt to total retail, and an immaterial <0.1%pts y/y extra to overall nominal consumption.
