More US shoppers tack on buy now, pay later debt for Cyber Monday

Reuters

Published Nov 27, 2023 01:58PM ET

Updated Nov 27, 2023 05:48PM ET

By Arriana McLymore and Deborah Mary Sophia

NEW YORK (Reuters) -A record amount of price-pinched holiday shoppers are expected to use buy now, pay later services for Cyber Monday to relieve stress on their wallets, according to Adobe (NASDAQ:ADBE) Analytics.

Shoppers are slated to spend between $12 billion and $12.4 billion online on Monday, with $782 million of purchases made with BNPL services, including Klarna and Affirm, representing a surge of nearly 19% from last year, the data company said.

Affirm shares gained nearly 12% on Monday after Adobe Analytics released the upbeat data. That stock has more than tripled in 2023, boosting its market value to more than $8 billion on the growing popularity of BNPL services. Rival Upstart (NASDAQ:UPST) Holdings rose 2.6% on Monday; its shares have gained nearly 90% so far this year.

BNPL has consistently been growing in popularity over the past several years, but its usage is getting a further boost from budget-conscious shoppers trying to avoid the additional fees and interest that come with purchases made through credit cards.

"The scale of the adoption (of BNPL) has just gotten so big. It's become really, really, really popular," said Dan Dolev, an analyst at Mizuho Securities.

Economists anticipated the holiday season would be slower than recent years due to financial pressure on consumers who are dealing with higher interest rates and lingering inflation. However, early indications from Monday's shopping suggests consumer spending looks to have remained steady even as consumer finances have deteriorated from post-pandemic strength.

A survey by Klarna found nearly half of those surveyed worried that they would not be able to pay off credit card bills in full from holiday spending.