Consumers with point-of-sale credit are generally more responsible when using other forms of credit

New TransUnion study analyzes the role of alternative financing options in the credit market and the effects on consumers

CHICAGO, Sep 23, 2021 (GLOBE NEWSWIRE) – A new study by TransUnion (NYSE: TRU) found that consumers who buy now, pay later (BNPL) and seek point-of-sale (POS) finance, too Actively using traditional financing credit – contrary to the assumption that these new credit offers are taking market share away from credit card issuers and other lenders.

The study, Understand the evolving point of sale industryWas unveiled at the virtual TransUnion Financial Services Summit 2021, Smarter Decisions: Emerging for Growth, attended by executives from the financial services sector from across the country.

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

BNPL and POS offers did not appear to have much of an 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 take advantage of point-of-sale finance are not doing so at the expense of traditional credit. We saw consumers applying for POS funding to build up credit on bank and retail cards and applying for new loans at a higher rate than the general loan population. These new forms of financing are growing the credit pie – and opening up more options for both consumers and lenders, ”said Liz Pagel, senior vice president of consumer lending at TransUnion. “Consumers are looking for new ways to finance purchases, and the convenience and budgeting of POS offers are driving them to fund more and larger purchases.”

The ease of use and predictable payment schedules allow consumers to spread smaller payments over time in order to be able to afford larger ticket items. A TransUnion survey of nearly 1,000 BNPL users found that the majority of consumers cited a timing distribution of payments (29%) and a simple application process (13%) as the main reasons for using POS funding. In contrast, lack of access to credit was not cited as a major concern for many consumers.

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

The study examined the credit profiles of over 6 million POS funding applicants (defined as consumers with a request for the TransUnion file from a POS lender) to better understand consumers interested in this type of product. The study created a profile of these consumers and examined their wallets and credit behavior.

The results showed that POS funding applicants have more credit products, such as credit cards, loyalty cards, and installment loans, in their wallets than the general credit-active population. Credit cards were the most popular with POS funding applicants (89%), followed by retail cards (75%) and car loans (73%).

POS funding applicants also were more likely to have larger numbers of cards in their wallets compared to the general lending population. However, card usage was very similar across risk levels, with most consumers having open cards on their cards. This suggests that consumers are actively looking for POS funding even if they could have put the purchase on a card.

Consumers applying for POS funding are also more likely to build or maintain credit card balances in the months following their request than the general credit active population – invalidating the assumption that BNPL / POS is driving down card balances.

Bank card

Retail card


POS financing

General credit
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POS financing

General credit
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However, consumers using BNPL / POS funding are still doing well and on par with the general credit-active population in terms of defaults. The study found that POS funding applicants, while performing slightly worse on credit cards, outperformed the non-POS segment on unsecured personal loans. The high failure rate of POS funding applicants makes these consumers an attractive segment for acquisition growth.

“As more consumers participate in POS financing, these consumers are still experiencing high defaults on traditional products and are heavily involved in the credit market,” said Pagel. “This underscores the opportunity for both traditional and POS lenders to offer this attractive segment more diverse credit solutions.”

For more information on the TransUnion study, please download the Insight Guide Understanding the Evolving Point-of-Sale Industry.

About TransUnion (NYSE: TRU)
TransUnion is a global information and insights company that enables trust in the modern economy. We do this by providing a comprehensive picture of each person so that they are reliably and securely represented in the market. This enables companies and consumers to act confidently and achieve great things. We call this Information for Good.®

As a leading presence in more than 30 countries on five continents, TransUnion provides solutions that help create business opportunity, great experiences and personal empowerment for hundreds of millions of people.


Dave Blumberg



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