Buy now, pay later boosts retail sales

Buy now, pay later (BNPL) is emerging as one of the retail sector’s fastest-growing payment methods, helping retailers boost sales, attract younger shoppers and increase customer loyalty at a time when consumers remain under pressure.

What began as an alternative payment option is increasingly influencing how South Africans shop. By allowing customers to spread payments over a short period, often interest-free, BNPL is making purchases more affordable and encouraging shoppers to spend more than they otherwise might.

Retailers including Edgars and TFG are seeing strong growth in BNPL usage, with the payment method proving particularly popular among younger consumers and those seeking greater flexibility in managing their finances.

At Edgars, BNPL has grown from a fledgling payment option when it was introduced in stores in 2022 to account for just under 10% of the retailer’s sales mix in 2026.

“We have seen a marked shift away from lay-by towards BNPL as customers increasingly prefer to take possession of their purchases immediately rather than wait for a lay-by to be fulfilled,” says Retailability CEO Norman Drieselmann.

The shift is having a measurable impact on sales. Edgars says BNPL users spend more than shoppers using most other payment methods, with average basket values exceeding R1,000. In the retailer’s cellular category, BNPL transactions now contribute twice as much as traditional store accounts.

Our focus at this stage is less on a specific contribution to sales and more on providing customers with greater flexibility and choice in how they shop and manage their purchases. While still in its early stages, it is growing gradually and approaching 5%

—  Scott Brown, TFG Financial Services managing director

The payment method is also driving repeat business. According to Drieselmann, many customers return to BNPL after their first purchase, reinforcing its role not only as a customer acquisition tool but also as a driver of loyalty.

While traditional store accounts continue to perform well, BNPL growth has significantly outpaced conventional retail credit. Edgars estimates that BNPL has delivered compound annual growth of about 40% over the past three years.

At TFG, BNPL remains a relatively new offering but is gaining momentum across the group’s brands.

Scott Brown, managing director of TFG Financial Services, said the retailer has been encouraged by customer uptake and engagement since introducing the payment option. “Our focus at this stage is less on a specific contribution to sales and more on providing customers with greater flexibility and choice in how they shop and manage their purchases. While still in its early stages, it is growing gradually and approaching 5%,” he said.

Brown said BNPL forms part of TFG’s broader strategy to make its brands and products accessible to a wider customer base. The offering has been well-received by both existing and new customers, particularly in the online environment, where flexible payment options are becoming increasingly important.

Importantly for retailers, TFG is already seeing evidence that BNPL customers shop more frequently than other consumers. “Early indications suggest that customers appreciate the convenience and flexibility that BNPL provides, with BNPL customers shopping more frequently than other customers. We’re encouraged by the levels of repeat usage we’re seeing,” said Brown.

The popularity of BNPL reflects broader shifts in consumer behaviour identified in a recent TransUnion white paper.

According to the credit bureau, BNPL users are typically younger and earlier in their financial journeys than traditional credit customers. More than a third of BNPL users are from Generation Z, a significantly larger proportion than is found among users of retail credit, credit cards or personal loans.

Buy now, pay later was this new innovative payment method four years ago. It’s now becoming more and more of a commodity around the world. We are seeing more and more adoption of buy now, pay later by both consumers and merchants. We’re seeing buy now, pay later being used across the entire product range

—  Dean Hyde, PayJustNow COO

The research also shows that BNPL customers are concentrated in lower- to middle-income segments, with most earning less than R25,000 a month. This positions the product as an accessible affordability tool for consumers who may not yet qualify for larger or longer-term borrowing.

Importantly, BNPL is also reaching consumers who have little or no experience with formal credit. Around 17% of BNPL users are classified as new-to-credit, while a further 20% fall into an underserved category with limited participation in the credit market.

This suggests BNPL could serve as an entry point into the formal financial system, allowing consumers to build repayment histories through smaller transactions before progressing to more traditional credit products.

For retailers, however, the immediate benefit remains higher sales. Nearly half of all BNPL transactions are valued at less than R1,000, while roughly two-thirds are below R2,500. These are purchases that consumers may otherwise have delayed or abandoned.

Despite its rapid growth, retailers do not see BNPL replacing traditional credit products. Both Edgars and TFG view it as a complementary payment option that caters to different consumer needs. “We believe there is room for multiple payment solutions to coexist,” Brown said.

“Our objective is to provide customers with a range of responsible payment options that best suit their individual circumstances.”

BNPL provider PayJustNow says consumer and merchant adoption continues to accelerate, helping to drive retail sales while expanding beyond traditional retail categories. COO Dean Hyde said the platform now has more than 4-million registered users, with around 1-million active users at any given time. Average transaction values are about R1 400, with customers typically paying a third upfront.

Hyde said BNPL is becoming increasingly mainstream globally, with providers expanding into additional financial products, marketplaces and new spending categories. Internationally companies are broadening their offerings, while BNPL is being used across a wider range of purchases.

“Buy now, pay later was this new innovative payment method four years ago. It’s now becoming more and more of a commodity around the world. We are seeing more and more adoption of buy now, pay later by both consumers and merchants. We’re seeing buy now, pay later being used across the entire product range,” Hyde said.

PayJustNow is expanding into travel, health care and transport. The company already offers BNPL for bus services, is working with travel partners and payment service providers to broaden access to airline bookings, and recently launched with Medicross, allowing customers to spread the cost of medical services such as doctor, dental and radiology visits. Hyde said health care is likely to become a significant growth area for the business.

“Health is going to become a very big vertical for us. At the Medicross health centres, you can access doctors, dentists, ophthalmologists and radiologists, and pay using buy now, pay later,” said Hyde.

The company is also targeting small businesses through integrations with point-of-sale platforms providers, enabling BNPL options to be offered more widely both online and in-store. “Wherever there’s a point-of-sale device, there will be buy now, pay later integrated into that payment experience,” he said.

Business Times