New TransUnion Study Analyzes The Role Of Alternative Financing Options In The Credit Market And The Impact On Consumers

CHICAGO, September 23, 2021 (GLOBE NEWSWIRE) – A new study TransUnion (NYSE: TRU) found that consumers seeking Buy Now Pay Later (BNPL) and Point of Sale (POS) financing are also actively using traditional credit, contrary to the assumption that these new credit offerings they are taking market share away from them. from credit card issuers and other lenders.

The study, Understanding the evolution of the POS industry, It was presented at the TransUnion 2021 Virtual Financial Services Summit, Smarter decisions: emerging for growth, attended by financial services executives from across the country.

BNPL and POS financing emerged as a popular offering among younger consumers, with Gen Z and younger Millennials (ages 18-30) making up the largest distribution of the population of consumers applying for POS financing during the period. study (32%). Bridge Millennials (31-40 years old) and younger Generation Xers (41-50 years old) were also more likely to favor BNPL / POS, with 78% of all applicants for POS financing being They are between the ages of 18 to 50 years.

The BNPL and POS offerings did not appear to have a significant impact on consumer use of other forms of credit. In fact, BNPL / POS applicants generally used other forms of credit more than the rest of the population.

“Consumers who can use point-of-sale financing are not doing so at the expense of traditional credit. We saw consumers applying for POS financing by accumulating bank and retail card balances and applying for new credit at levels higher than the general credit population. These new forms of financing are increasing the credit pie, opening up more opportunities for both consumers and lenders, ”said Liz Pagel, senior vice president of consumer loans for TransUnion. “Consumers are looking for new ways to finance purchases, and the convenience and budget that POS offerings provide is driving them to finance more, larger purchases.”

Ease of application and predictable payment plans allow consumers to spread smaller payments over a period of time in order to purchase larger ticket items. A TransUnion survey of nearly 1,000 BNPL users found that the majority of consumers cited the distribution of payments over time (29%) and an easy application process (13%) as the top reasons they used the POS financing. Lack of access to credit, on the other hand, was not cited as a top concern for many consumers.

Consumers applying for POS financing are an attractive segment for acquisition growth

The study analyzed the credit profiles of more than 6 million applicants for POS financing (defined as consumers with a query on a POS lender’s TransUnion file) to better understand consumers interested in this type of product. The study described these consumers and examined their wallets and credit behaviors.

The findings showed that POS financing applicants have more credit products, such as credit cards, retail cards, and installment loans in their wallet compared to the general credit workforce. Credit cards were the most popular among applicants for POS financing (89%), followed by retail cards (75%) and auto loans (73%).

Applicants for POS financing were also more likely to have a greater number of cards in their wallet compared to the general credit workforce. Card utilization levels, however, were very similar across all risk levels, and most consumers had options available to purchase on their cards. This suggests that consumers are actively seeking POS financing even when they could have made the purchase with a card.

Consumers applying for POS financing are also more likely to accumulate or maintain credit card balances in the months following their inquiry than the general credit workforce, debunking the assumption that BNPL / POS are reducing credit card balances. the cards.

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POS financing

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POS financing

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However, consumers using BNPL / POS financing are still performing well and on par with the general credit workforce when it comes to delinquency. The study found that while POS financing applicants perform slightly worse on credit cards, they outperformed the non-POS segment on unsecured personal loans. The healthy delinquency rates demonstrated by applicants for POS financing make these consumers an attractive segment for acquisition growth.

“While more and more consumers are participating in POS financing, these consumers continue to demonstrate healthy delinquency rates on traditional products and are heavily involved in the credit market,” Pagel said. “This highlights an opportunity for point-of-sale and traditional lenders to provide more diverse credit solutions to this attractive segment.”

To learn more about the TransUnion study, download the information guide Understanding of the evolution of the point of sale industry.

About TransUnion (NYSE: TRU)
TransUnion is a global information and knowledge company that makes confidence in the modern economy possible. We do this by providing a complete picture of each person so that they can be reliably and safely represented in the marketplace. As a result, businesses and consumers can transact with confidence and achieve great things. We call this Information for Good.®

With a leading presence in more than 30 countries on five continents, TransUnion offers solutions that help create economic opportunities, great experiences and personal empowerment for hundreds of millions of people.


Dave blumberg



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