Holiday shoppers increasingly turning to cash and debit cards for payments, according to a recent report.
In the lead-up to the festive season, a shift in shopping habits and payment methods has become apparent. According to various reports, traditional physical presents remain popular, with nearly three-quarters of respondents planning to buy them. However, a significant portion of shoppers are also opting for homemade presents (25%) and gifting experiences (21%).
Another notable trend is the increasing consideration of payment plans and financing options. Oracle Retail's October report revealed that over seven in 10 respondents would consider using such options for their holiday purchases. This trend is further evident in the surge of buy now, pay later (BNPL) usage during the holiday season.
Afterpay reported a 120% increase in transactions between Black Friday and Cyber Monday compared to before the holiday, while Adobe Analytics found that BNPL orders jumped by 85% between Thanksgiving and Cyber Monday compared to the week prior. Companies offering BNPL services, such as Klarna and PayPal, have experienced nearly 85% growth in orders and an 88% increase in revenue this season.
The rise in BNPL usage has raised concerns among experts, who view it as a potential sign of consumers' long-term financial health. A Forbes Advisor poll found that 13% of respondents aged 26 to 41 intend to use BNPL services this holiday season, with Gen Z and millennials leading the charge. According to the same report, 48% of Gen Z respondents and 47% of millennials are using installment payment plans to purchase their holiday goods. Gen Xers are not far behind, with 40% opting for these payment methods.
However, the holiday season also seems to be a time of financial constraint for many shoppers. A Forbes Advisor poll found that 51% of holiday shoppers plan to purchase fewer gifts due to inflation concerns, and 45% are buying cheaper presents. In terms of payment methods, 76% of shoppers polled are using cash or debit cards, while 20% are using gift cards and 13% are using credit card rewards or cashback. Only 42% of shoppers are using credit cards, and 10% will use BNPL loans.
In conclusion, the holiday shopping season of 2022 has seen a significant shift in payment methods, with a notable increase in the use of BNPL services. While this may indicate consumers' financial instability, it also reflects their adaptability to new payment solutions in times of economic uncertainty.
