Merchants Face Smarter Shoppers Who Know Which Payment Button to Press

Consumers are becoming far more deliberate about how they use Pay Later tools, assigning each payment option a specific role in managing their finances. The emerging pattern suggests that speed, credit strategy and liquidity are no longer competing ideas in the Pay Later market. They are becoming separate use cases.

That shift appears in “Speed vs. Strategy: How Consumers Choose Between BNPL and Card Installments,” a new PYMNTS Intelligence report examining how Americans decide between buy now, pay later (BNPL), card installment plans and traditional revolving credit. Based on a survey of 2,980 U.S. consumers conducted in January, the research finds that Pay Later options are increasingly segmented by financial purpose. Consumers are not simply selecting a payment button at checkout. They are choosing a financial strategy.

The data shows that installment plans have become the dominant Pay Later product, while BNPL plays a more targeted role tied to speed and convenience. At the same time, store-branded installment plans are carving out a strategic position by combining both advantages.

Key Findings From the Report Include:

31% of consumers used credit card installment plans in January, compared with 12% who used BNPL. The gap of nearly 3 to 1 shows that installment products have become the most widely used Pay Later option across demographics and income levels.

43.4% of consumers say speed and approval are the primary reasons they choose BNPL. The data indicates that shoppers treat BNPL mainly as a fast access tool at checkout rather than a long-term credit solution.

34.2% of consumers cite credit management as the main reason they use credit card installment plans. This positions installment products as structured borrowing tools used for budgeting and managing credit limits.

The strategic divide is especially clear in how different payment products compete.

BNPL dominates when immediacy matters. Consumers turn to it for quick approval and low friction at the point of sale. Installment plans, by contrast, are tied to deliberate credit management. Users rely on them to spread payments in a structured way that fits within broader budgeting goals.

Store-branded card installment plans occupy a distinctive middle ground. Consumers cite speed and credit management almost equally as reasons for using them. That combination allows store cards to compete directly with BNPL during checkout while still functioning as a credit management tool.

Financial pressure can also shift how consumers use Pay Later products. When households face tighter budgets, BNPL expands beyond a simple convenience feature. Speed remains the leading motivation, but credit and liquidity needs begin to rise alongside it. Installment plans behave differently. Their use remains anchored in credit management regardless of financial stress.

Generational behavior reinforces this segmentation. Gen Z consumers show the clearest distinction between the roles of each payment option. They gravitate toward BNPL for its fast approval process while relying on installment plans to manage recurring or larger expenses.

For merchants, banks and FinTech providers, the findings point to a strategic reality. The Pay Later market is no longer a single product category competing on convenience alone. It is becoming a set of specialized financial tools that serve different consumer goals.

Companies that align their offerings with those roles may gain an advantage as the market matures.