Why the hospitality industry needs BNPL now more than ever

Buy Now, Pay Later (BNPL) has enjoyed a steady rise in popularity since the concept first hit Australian shores. Pre-covid, many Australians were taking advantage of paying for things like clothing, technology and appliances in bite-sized repayments, giving them the opportunity to maintain a more consistent cash flow.

Now, in the weeks and months after pandemic-enforced lockdowns, the affordability of paying for richer dining experiences has brought to light the power of BNPL within the hospitality industry. In fact, it’s platforms like payo that are helping venues rebuild their businesses in a post-covid world, restoring the Australian food scene we know and love.

However, while it has only recently made its debut onto Australia’s food and beverage landscape, the Buy Now, Pay Later phenomenon is far from new.

The rise of BNPL in retail

While BNPL originally entered the local consumer scene in the early 2010s, it has steadily become the purchase preference of choice since 2018.

According to recent survey results from a Paypal study, almost half of Australians who shop online (45%) have used BNPL, and over half of those BNPL users (51%) have two or more BNPL accounts. More impressively, in the twelve months to June 2020, BNPL transactions here in Australia rose by 43%.

The downfall of credit cards

The success of BNPL has had notable repercussions on the rest of payments landscape. The total debt accruing interest of credit cards stood at a modest $17.68 billion as at September 2021 – its lowest levels since November 2003, and a far cry from its peak of $32 billion in 2018. In fact, more than half a million Aussies cancelled their credit cards in 2021 in favour of more appealing options (like BNPL).

Meet BNPL’s main users

When it comes to the question of who exactly is using BNPL services, new data from Nielsen shows that almost two-thirds are aged 18 to 44, with Gen Z women forming the majority with purchases of clothing ­– one of the most popular categories for BNPL shoppers. 

In fact, consideration of BNPL across Gen Z has risen 15% compared to last year. Now, a substantial 79% of them would consider using it.

Retail BNPL purchases are just the beginning

The bulk of BNPL purchases currently occur within the retail industry, on things like household appliances, furniture, clothing and accessories. However, 28% of purchases are already on essentials, such as food, which is up a notable 11% from 2019. And with BNPL adoption set to grow by 24% by 2028, there’s little doubt that buying now and paying later is going to a regular fixture of future spending in Australia.

Payo is bringing BNPL to the hospitality biz

One business that has already identified the value of BNPL for the hospitality industry is payo, which allows customers to split their bills between four equal interest-free payments. By signing up to the platform, bars and restaurants can offer their patrons a convenient and affordable way to pay for their dining experiences, often seeing them increase their spending by up to 50%.

According to CEO and Co-Founder Taf Chiwanza, the solution was born from a desire to provide customers with the opportunity ‘upgrade their meal’ without having to deprive themselves afterwards.

But it’s not just individual diners driving spending; venues can attract bigger ticket events and functions, as well as receive immediate payment for these larger transactions.

The beauty of the app is that it combines all transactions into only two monthly payments each Wednesday instead of four fortnightly payments for every single purchase. This makes it easier for customers to keep on top of their repayments and prevents them from being overwhelmed by multiple repayments for every purchase. It’s also why local businesses are able to faster rebuild themselves after closing their doors during the pandemic.

Payo are firm believers in treating yourself. It understands it’s what we Australians do best – celebrate people, milestones and relationships over beautiful food and drinks. This is why Payo helps local businesses grow through BNPL, and at the same time, helps everyday Australians upgrade their dining experience through a flexible and affordable payment option.

Want to learn more about BNPL’s entry into the hospitality industry? Enquire here.