(New York, NY) Over the past few years, post-purchase issuer-provided installment plans have surged in popularity, thanks to offerings like American Express Plan It, My Chase Plan, and Mastercard Installments. Recent data from Auriemma Group’s The Payments Report indicates these plans are now rivaling in-store installment offers. Availability increased 18 percentage points since Q4 2019, with 40% of credit cardholders having been offered this option, while in-store installment plans remained stagnant at 36% over the period.
“Post-purchase installment plans provide cardholders the benefits of splitting payments without the hassle of signing up for a new product,” says Jonathan O’Connor, Senior Manager of Research at Auriemma. “It is no surprise these options are catching up to in-store Buy Now, Pay Later offers. Cardholders with access to this option enjoy the benefits of both products.”
While enrollment with Buy Now, Pay Later at the point-of-sale in-store is slightly higher than post-purchase issuer-provided installment plans among debit cardholders (19% and 12%, respectively), again the trend line is more favorable for the latter, which has grown 7-percentage points, compared to 4-percentage point growth for in-store enrollment.
And when asked which option they would prefer, over two-thirds of debit cardholders consistently say they would rather pay with their card at the point-of-sale and later enroll their purchase onto an installment plan with a card provider. The remaining one-third prefer enrolling with a Buy Now, Pay Later provider, like Klarna or Affirm, at the point-of-sale.
“Given the prevailing trends and cardholder preferences, we expect post-purchase issuer-provided installment plans to outpace in-store Buy Now, Pay Later options in the coming year.” says O’Connor. “Our next issue of The Payments Report will delve further into these products to explore their usage and potential trajectory in light of the expanding installment lending landscape in retail.”
Survey Methodology
The Payments Report
This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in March and April 2024 among 800 adult debit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying.
About Auriemma Group
For 40 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, email Jonathan O’Connor at research@auriemma.group.
(New York, NY) In the ever-evolving landscape of retail finance, Buy Now, Pay Later (BNPL) is reshaping the way consumers approach their borrowing and purchasing decisions. As store card ownership wanes, BNPL has emerged as a compelling option for modern shoppers seeking flexibility and convenience. Auriemma Group’s latest issues of The Payments Report and Cardbeat US uncover the factors driving point-of-sale decisioning between BNPL and store cards, and how a good BNPL experience can increase store card acquisition.
Buy Now, Pay Later directly competes with store cards at the point-of-sale.
BNPL offers have become commonplace when shopping online or in-store. According to The Payments Report, 64% of debit cardholders say they have been offered an installment plan online (up from 45% in Q4-2019). In-store offers have also increased slightly, now at 36%. And about half of those offered an installment plan in either channel report enrolling in the past 12 months. This momentum is in direct contrast to store cards, whose ownership has dropped 14-percentage points (now 39%) since 2015.
“We found that at the point-of-sale cardholders are most interested in applying for these products for larger ticket size purchases,” says Jonathan O’Connor, Senior Manager of Research at Auriemma. “However, when both Buy Now, Pay Later and store cards are offered, cardholders are near evenly split on which option to select, with a slight preference towards Buy Now, Pay Later.”
But what would happen if retailers only offered store card applications at the point-of-sale? Not offering BNPL at the point-of-sale would have a marked impact on store credit card enrollment. 54% of those more likely to select BNPL say they would be likely to apply for a store card instead, if it were the only option presented to them.
Fee amounts and interest rates inform cardholders’ application decisions.
About four-in-ten debit cardholders say a retailer’s recommendation would make them likely to apply for a BNPL plan (41%) or store credit card (35%) at the point-of-sale. However, according to Auriemma’s research, it is the least important of the factors tested.
While a retailer’s recommendation or signage may initiate decisioning, BNPL and store card acquisition often hinges on fees, rates, and benefits. Over eight-in-ten debit cardholders say these factors are at least somewhat important when deciding whether to apply for a BNPL plan or store card at the point-of-sale. Second tier factors include trust in the brand, credit score impact, and one-time discount offers.
“Buy Now, Pay Later plans offer consumers payment flexibility without the commitment of applying for a credit card,” says O’Connor. “And while in many ways Buy Now, Pay Later can be seen as a competitor to card product acquisition and usage, the method can act as a gateway to a future card relationship.”
A good Buy Now, Pay Later experience could open the doors to store card application.
While there is much to be said about the ways BNPL competes against store cards, there is also evidence that the option could create a pipeline to store card enrollment. According to Cardbeat US, 41% of credit cardholders say a good BNPL experience with a brand they shop at regularly is likely to encourage them to apply for a store card, if offered. This is particularly true of Gen Z and Millennial cardholders.
54% of credit cardholders who were approved for a BNPL plan say they were offered a store card at some point during their experience. Notably, 69% of these cardholders applied and were approved for a store card during that time, highlighting just how synergistic the two products can be.
“Buy Now, Pay Later does have an impact on store card application, but the pendulum swings both ways,” says O’Connor. “Some consumers will choose Buy Now, Pay Later at the point-of-sale over and over again, while some will inevitably find their way to store card enrollment through positive BNPL experiences, demonstrating the potentially symbiotic relationship between the two offerings.”
Survey Methodology
The Payments Report
This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in March and April 2024 among 800 adult debit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying.
Cardbeat US
This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in March 2024 among 800 adult credit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying.
About Auriemma Group
For 40 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, email Jonathan O’Connor at research@auriemma.group.
(New York, NY) Online payment card application abandonment is common, but can be curbed. Auriemma’s latest issue of Mobile Pay Tracker found that 49% of credit cardholders have abandoned an online card application, and that those who abandon only completed one-third of the applications they started, on average, in the past 12 months. However, Auriemma’s research also identified three ways to mitigate application abandonment—pre-approved offers, email and text reminders, and by thoughtfully communicating value proposition elements.
1) Pre-approved offers can encourage applicants fearing rejection to complete their card application.
One-in-ten of those who have abandoned an online payment card application did so for fear of being rejected. This proportion increases to 33% among those with FICO scores less than 670. Pre-approvals could help facilitate application completion for those unsure of their approval odds.
According to the Q2-2023 issue of Cardbeat US, 70% of credit cardholders say they are likely to apply for a new credit card if preapproved. This is especially true for cash back and point card applications.
“While some applicants may be attracted to a card’s value proposition, they may think the card is out of reach,” says Jonathan O’Connor, Senior Manager of Research at Auriemma. “A preapproved offer could be the tipping point that is the difference between application abandonment and completion.”
2) Following up by email or text greatly increases application completion odds.
Over four-in-ten cardholders who have abandoned an online payment card application say they received an email or text reminder that they started but did not finish the application. And this reminder led 45% of them to complete at least one of their outstanding applications.
“While reasons for application abandonment vary, some have more to do with technical or application-centric issues,” says O’Connor. “Reminders allow those who abandoned in frustration the opportunity to complete a process they may have always intended to finish.”
However, reminders do not always work on the first try. On average, those who completed an application following a reminder email or text say that they received over three communications before completing an abandoned application.
3) Make sure communications provide new, valuable information.
Email or text payment card application reminders can be helpful to some, but most want these communications to include new, valuable information. 73% of credit cardholders agree that to be valuable reminders should include fresh details about the card such as new introductory offers, rewards, or benefits.
“Providing increased value or reminding applicants of strong rewards and benefits can offset what otherwise may be seen as an irritating message,” says O’Connor. “While these types of communications are seen as an annoyance to some, offering an opt-out option while emphasizing new details or lesser-known features can motivate application completion without alienating your potential cardholder.”
Online payment card application abandonment is a challenge that can be effectively addressed through strategic measures. By enacting these three strategies, issuers can mitigate application abandonment and foster stronger connections with prospective cardholders, ultimately benefiting issuers and cardholders alike.
Survey Methodology
Mobile Pay Tracker
This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in August 2023 among 2,151 adult Apple Pay, Google Pay, and/or Samsung Pay eligible credit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying.
About Auriemma Group
For nearly 40 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, call Jonathan O’Connor at (+1) 1-646-437-6116.
(New York, NY) Co-brand credit cards connect cardholder spending to exclusive benefits and rewards at their favorite brands. The fierce competition to capture everyday spend and increase cardholder acquisitions continues to push brands, issuers, and networks to evaluate which value propositions resonate best. Auriemma Group’s latest issue of Cardbeat US found that rewards—points, miles, or cash back for applying and for ongoing spend—are the top driver of card acquisition and usage.
The challenge for brands, issuers, and networks is crafting a compelling value proposition that optimizes their objectives and delivers a product that resonates with customer enough to stand out in a crowded marketplace. The card program’s benefits and rewards must be differentiated enough to speak to a brand’s unique customer base, while valuable enough to rival the competition, which includes proprietary bank cards in addition to other co-brand cards.
Auriemma Group’s latest issue of Cardbeat US determines the drivers of value proposition success by asking existing co-brand cardholders to compare potential co-brand rewards and benefits. Surveying opinions on the relative value of rewards, card design, tolerance for annual fees, and more, the issue confirms that card rewards are the primary driver of co-brand card success.
46% of co-brand credit cardholders indicated that their desire to earn ongoing points, miles, or cashback rewards for spend would motivate them to apply for a co-brand credit card, more than any other single factor across all types of co-brand cards (e.g., airline, hotel, retail). Attractive sign-up offers also play a role–29% of cardholders say they would motivate them to apply for a co-brand, the second-most cited factor.
And when considering potential motivators for increasing co-brand spend outside the partner brand, roughly eight-in-ten co-brand cardholders say their co-brand delivering double points for online (82%), grocery (81%), and/or restaurant purchases (77%) increases their likelihood to use it.
“Card acquisitions are powered by attractive sign-up offers and strong ongoing rewards,” says Gary Rezak, Managing Director at Auriemma Group. “Then the value of the rewards and benefits, as well as the cardholder’s ongoing relationship to the brand, continue to engage cardholders and unlock the programs’ full potential.”
In addition to rewards value, brand affinity is a significant driver of cardholder engagement, especially for retail co-brand cards. 34% of retail co-brand cardholders cite frequent purchases at the brand as their reason for applying. And hotel co-brand cardholders have their own unique motivations, with improving loyalty status as an especially powerful motivator of ongoing engagement for that category. While other co-brand card characteristics, such as the card’s design or APR, should be thoughtfully considered, far fewer cardholders say these factors have a major impact on their card usage.
“Many value proposition elements make an incremental difference in the success of a co-brand and cannot be ignored, but strong rewards value is a must,” says Rezak, “a co-brand without valuable sign-up and ongoing rewards risks never getting a prospective applicant’s consideration in the first place.”
To get full access to this special co-brand issue of Cardbeat, Auriemma’s syndicated research publication studying the debit and credit card industry, or to discuss a custom research study on cards and payments topics, contact Jaclyn Holmes, Director, Auriemma Research.
For assistance assessing, evaluating, finding partners, and negotiating your co-brand and private label partnership, contact Gary Rezak, Managing Director, Auriemma Group.
Survey Methodology
Cardbeat US
This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in June 2023 among 1600 adult credit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying.
About Auriemma Group
For more than 35 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise, and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London.