More than Three-Quarters of Consumers with Nonprime Credit Anticipate Using Flexible Payment Options This Holiday Season, New Katapult Survey Shows
06 October 2022 - 11:00PM
This holiday season, retailers hoping to appeal to customers
feeling the pinch of inflation will need to offer flexible payment
options, such as buy now, pay later (BNPL) and lease-to-own (LTO),
according to a new survey from Katapult, an omnichannel
lease-purchase platform that provides alternative payment solutions
to merchants and consumers. The data showed that more than
three-quarters of consumers with non-prime credit scores or lower
(78%) would use a flexible payment option to purchase gifts for
themselves or others this holiday season, if offered by the online
or physical stores where they shop.
Despite rising prices and interest rates, the Katapult survey
showed that this holiday season, more than one-third of all
respondents (32%) expect to spend more than last year on gifts. 36%
of all respondents expect to spend between $400-$1,000 in total.
Shoppers are on the hunt for deals, especially on big-ticket items.
Many consumers with non-prime credit scores or lower take advantage
of discounts this time of year to buy home electronics (54%), home
furnishings (31%), and home appliances (24%), for themselves or
others, according to the survey.
“The holidays can be expensive even in rosier economic times,
and that’s likely to be even more true this year with consumers
paying more for less due to higher prices,” said Orlando Zayas, CEO
at Katapult. “Without the flexibility to split larger payments over
time, many non-prime shoppers will have difficulty affording items
such as video game consoles, laptop computers, TVs, and other
popular gifts for themselves or others.”
In 2022, American consumers are feeling the pinch of rising
interest rates and the climbing cost of goods. Those living
paycheck to paycheck, without credit, or with non-prime credit are
especially vulnerable to the effects of inflation. Many of these
consumers with non-prime and lower credit scores pay for most of
their online or in-store purchases with debit cards (85%) or mobile
payment apps such as Google Pay, Apple, or Samsung Pay (51%).
However, they have fewer affordable payment options available to
help with bigger-ticket purchases.
Payments Emerging as a Key Differentiator for
Retailers
According to the survey, more than half of Americans (54%) are
more likely to shop with a merchant that offers flexible payment
options, such as lease-to-own or buy now, pay later. Flexible
payment options are often the only way for non-prime consumers to
obtain necessary durable goods, especially as many traditional
lenders tighten their lending criteria or increase their interest
rates.
As a result, nearly two out of three Americans (62%) say that
higher prices due to inflation are causing them to delay or skip
purchasing big-ticket durable goods. The ability to shop from
merchants where they can stretch their dollars further and spread
out their payments over time with lease-to-own options can make a
significant difference.
In fact, nearly a quarter (24%) of respondents said they feel
relieved when they see a merchant offers flexible payment options.
More than one-in-five (22%) feel valued, and 16% are curious.
“Consumers today are choosier, and they want to feel seen and
valued,” said Zayas. “They are more loyal to merchants that
understand and accommodate their needs. Offering flexible payments
is one-way retailers can do that, especially during the competitive
holiday shopping season.”
Younger consumers are particularly eager to use alternative
payment solutions this holiday season and will specifically seek
out retailers that offer those options. According to the survey,
60% of Gen Z and millennials would be more likely to shop from a
merchant that offers flexible payment options, compared to 45% of
their Gen X and older counterparts. Additionally, younger consumers
are slightly more likely (6%) to have used lease-to-own
previously.
“We’ve found lease-to-own and other flexible payment options
appeal to younger consumers since they are more likely to pick up
on newer trends, less likely to have established credit, warier of
incurring credit card debt, and often struggle with larger
purchases since they have yet to hit their prime earning years,“
said Zayas. “By offering flexible payment options, retailers can
reach younger customers now and earn their loyalty for years to
come.”
Katapult surveyed 1,184 adults in the U.S. whose credit scores
qualify as non-prime (660-601), subprime (600-501), and deep
subprime (500-300). Fielding took place in August 2022. To keep up
with recent announcements, visit Katapult's News page. To
learn more about Katapult, click here.
About KatapultKatapult is transforming the
world of lease-to-own with transparent lease-purchase plans that
flex to meet the needs of millions of Americans who are overlooked
by traditional credit. With proprietary artificial intelligence
(AI) and machine learning (ML) risk-modeling technology, Katapult
predicts consumer behavior more accurately than traditional credit
scores—providing new paths to ownership for people and new
customers for omnichannel retailers. Katapult ensures exceptional
experiences with seamless integration, both directly with merchants
and through eCommerce platforms, and award-winning customer
service. Visit www.katapult.com to learn more.
Investor Inquiries:Katapult Vice President of
Investor RelationsBill
Wright917-750-0346bill.wright@katapult.com
Press Inquiries:Allison +
Partners908-930-0835katapult@allisonpr.com
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