How Pay Later Options Are Redefining Consumer Spending — an Expert Look at What’s Next

PYMNTS Intelligence’s latest research finds that the U.S. market for buy now, pay later (BNPL) credit totals $175 billion. While that’s a small slice of total consumer spending, it represents an 88-fold spike in BNPL in just six years.

Growing consumer demand for fixed installment plans when they make a purchase is fueling hot competition among FinTechs and traditional banks, not just for consumer wallets but also for ties with merchants. The pay later ecosystem is rapidly evolving to change how Americans shop and merchants sell goods and services.

In “Pay Later Revolution: Redefining the Credit Economy,” a PYMNTS Intelligence special report, we survey the evolution of credit and unpack the business and revenue models driving the highly competitive and rapidly evolving consumer credit landscape. One key insight: Higher-income consumers increasingly use BNPL not out of necessity but out of the convenience it affords in managing personal cash flows.

Inside “Pay Later Revolution: Redefining the Credit Economy”:

More than 1 in 2, or 51.2%, of adult American consumers using BNPL do so out of financial necessity — slightly more than do so out of convenience (46.1%). BNPL is no longer the exclusive provenance of shoppers with crimped pocketbooks.

Consumers using BNPL out of necessity are most likely age 25 to 34. Slightly more than 1 in 5, or 20.7%, in that group, taps the product to pay their basic bills.

Convenience users of BNPL are most likely to be 65 or older and comprise 28% of all BNPL users of all ages. Interestingly, 61% of BNPL users who make at least $100,000 a year use the credit option for its convenience when managing their cash flow or maximizing their rewards.

Hybrid business models that shift some BNPL fees to consumers are gaining popularity. The BNPL industry began with merchants offering the service to consumers free of fees and interest as long as they paid on time. Now, the tide is shifting as merchants push back against those fees.

Download the report to learn more about the Pay Later industry.