By CultureBanx Team
- Dollar General will offer customers its version of a buy-now, pay-later at more than 1,700 stores
- Consumers don’t realize BNPL plans are a form of credit or a loan, and 27% of Black households are late on paying their debts
Discount retailer Dollar General (DG -0.26%) announced a series of new financial services through a partnership with Sezzle at more than 1,700 stores. The low-cost chain will offer customers its version of a buy-now, pay-later (BNPL) purchase option as it looks to get in on the BNPL market that’s expected to reach $3.98 trillion by 2030, according to Allied Research. Here-in lies the issue, many consumers don’t realize BNPL plans are a form of credit or a loan, and 27% of Black households are late on paying their debts.
Why This Matters: Dollar General’s targeted customers are primarily women who are located in diverse suburban communities, with a total household annual income ranging from $50,000 to $125,000. Typically, the low-cost chain has largely catered to customers on a tight budget to shop at the company’s more than 16,000 stores. Right now their average shopper comes from a household that earns $40,000 or less per year. In 2019, the U.S. Census Bureau released data showing the median income for an African American household was $39,490, putting them right in the Dollar General consumer sweet spot.
The DG Buy Now Pay Later program will provide customers with zero-interest payments on purchases, allowing them to pay for their purchases in four installments. Traditionally offered just for online spending by financial tech companies like Affirm (AFRM -15.57%), Klarna and PayPay Credit in addition to Afterpay. Now, the plans have been extended to include some in-store purchases too, and credit-card issuers are getting into the act as well.
Last year alone, Americans spent $20.8 billion through these BNPL services, with purchases overall up 230% since the start of 2020, according to a study by Accenture. CNBC’s Small Business Survey reported higher BNPL popularity among Black and Hispanic Americans with 12% of Blacks and 13% of Hispanic Americans saying they use BNPL for holiday purchases, compared to only 5% of white Americans.
What’s Next: Buy now, pay later plans make it so easy to finance a purchase that many shoppers sign up without really knowing what they’re getting into.
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