Buy now, pay later (BNPL) continues to grow in popularity across every age demographic, with the rate of American consumers using the practice rising 80% between 2020 and 2021.
However, most of that growth came from younger shoppers, with millennials making up 40% of BNPL users in 2020, the largest share of users by age group. Generation Z consumers are expected to catch up eventually, as they’re already adopting BNPL at a higher rate than their millennial counterparts.
Millennials will continue to account for the largest portion of BNPL users, while 44% of all Gen Z consumers will likely use BNPL at least once before the end of the year, versus 37% of millennial shoppers.
Consumes from both groups report strong awareness of major BNPL providers, and BNPL is likely to gain a major position in their wallets as it becomes a common way to payment. Fifty-six percent of consumers across generations already say they prefer BNPL over credit cards due to the ease of set payments, the simple approval process and lack of interest charges.
BNPL and Paycheck-to-Paycheck Living
The portion of consumers living paycheck to paycheck peaked in December 2020 at 65%, dropped to 54% by May 2021 before a sharp jump to 61% by December 2021, according to a recent PYMNTS study.
While 77% of people annually earning less than $50,000 reported living paycheck to paycheck at the end of last year, having a higher income was no guarantee of being able to set money aside. Among those making between $50,000 and $100,000, 66% said that they lived paycheck to paycheck, along with 42% of people who earned more than $100,000.
Among consumers who live paycheck to paycheck, another PYMNTS survey found that 58% of people who have trouble paying their bills have a strong interest in BNPL products provided by their banks, as do 45% of those who don’t struggle to pay their bills. That compares to 32% of those who do not live paycheck to paycheck.
Meanwhile, 54% of Gen Z consumers, 57% of bridge millennials and 60% of millennials said they would be interested in buy now, pay later options from their banks.
For more on how the BNPL space is growing and changing, download PYMNTS’ new Buy Now, Pay Later Tracker.