The Buy Now Pay Later (BNPL) service has gained popularity and has enabled the payment option to expand beyond the retail consumer sector. American Express (Amex) joins the race by offering BNPL options on its travel services.
Amex provides a new option for customers to pay for flights in monthly installments
The new option is known as “Plan It” is available for US cardholders. The service is eligible for air travel booked exclusively through AmexTravel.com. Integrating “Plan It” directly into the checkout experience will provide card members more payment flexibility for flight purchases.
The fixed monthly fee for “Plan It” is a fraction of each purchase, and it’s lower than the standard interest rates credit cards typically charge for carrying a balance. The BNPL option will also be provided in prepaid hotel reservations booked through the issuer’s travel portal later this year.
“Plan It” provides installments for purchases above $100 for any flights booked
Shikha Narula, vice president of U.S. consumer lending at Amex said BNPL is here to stay. The introduction of ‘Plan It’ at point of sale within the Amex travel platform is a “natural progression” of the offering. She said, “Integrating “Plan It” directly into the checkout experience will provide card members more payment flexibility for flight purchases of $100 or more, giving them an option to pay in installments with a fixed monthly fee before they purchase”. The service will avoid paying interest charges on large purchases and allows installments.
The move is another step forward for the BNPL model, which major card players are increasingly adopting, as they face competition from upstart installment lenders such as Affirm, Afterpay, and Klarna.
Amex is a pioneer among major credit card lenders offering installments when it rolled out its lending options in 2017. Since then, Amex cardholders have established some six million installment plans on roughly $5 billion worth of purchases. Millennial and Gen Z customers made up almost half of those who took the plans, reflecting a growing preference for more predictable monthly payments.
The release of this new feature is timely, given that travel bookings reported on Amex Travel are already up 50% in the first quarter. This coincides with the acceleration of vaccines being administered across the U.S., and a warmer season coming through. Capitalizing on this, Amex will secure its customers’ travel intentions and will also excite new customers particularly the millennials who favored BNPL over all other spending options
Millennials prefer using BNPL for their travel plans
A recent Amex Trendex survey conducted by Morning Consult showed that 62% of millennials planned on using a BNPL option for their next trip. Around 22% of the 2,000 travelers surveyed that includes 40% of the millennials have used the BNPL option.
The “Plan It” will help existing customers who have not yet prioritized BNPL to get comfortable with the option. It will entice new consumers to choose Amex as their card as its reward system works the same as other cards. A pre-purchasing calculator will be included to help users pre-determine their payment installments and cross-reference with their feasible budgets.
Consumers can potentially save money on ‘Plan It’ through staggered payments for big purchases and avoid interest fees. However, they will still pay a fee, which is less than the interest payment, for the privilege of using the new feature.