39% of Millennials Say They’ve Used BNPL as a Payment Option in the Last Year

Buy now, pay later (BNPL) has emerged as a compelling payment option, particularly among millennials. This shift presents an opportunity for subscription merchants to enhance their offerings, potentially increasing revenue and creating long-term customer loyalty.

A PYMNTS Intelligence report, “‘Adjustable’ Is the New ‘Agreeable’: BNPL Flexibility for Subscription Success,” a collaboration with Sezzle, examines how this trend can enhance revenue growth and help build a more sustainable subscriber base.

A New Payment Paradigm

BNPL is gaining traction as a preferred payment method, with 16% of U.S. consumers abandoning traditional payment methods in favor of BNPL solutions. This trend is particularly pronounced among millennials, with 39% reporting they used BNPL in the past year. The surge in popularity is underscored by a 28% year-over-year increase in gross merchandise volume for BNPL purchases through a single service, indicating its effectiveness in driving sales. Subscription merchants that adopt BNPL can leverage this to capture a larger market share, transforming casual buyers into loyal subscribers.

The financial impact is significant. On Black Friday, shoppers using BNPL spent an average of $150 more than those using conventional payment methods, showcasing the heightened purchasing power this payment option enables. Millennials exhibit a strong preference for flexible payment methods, making it essential for merchants to incorporate BNPL to meet their demands. Subscribers reliant on BNPL are 2.9 percentage points more likely to cancel if this option is unavailable, emphasizing its importance in maintaining customer satisfaction.

Enhancing Subscriber Experiences

BNPL enhances the overall subscriber experience by offering flexibility that aligns with consumer expectations. In the subscription economy, 30% of subscribers generate 79% of total revenue, highlighting the importance of retaining loyal customers. To combat churn, which has become a solvable issue for 96% of businesses, subscription merchants must adopt data-driven strategies, integrating BNPL into seamless onboarding processes and exemplary customer service.

Millennials represent a lucrative subscriber segment, often spending more and valuing convenience. By offering BNPL as a payment choice, merchants can cater to the needs of these high-value subscribers, who are more likely to cancel if faced with payment difficulties. This integration not only addresses their preferences, but positions BNPL as a key factor in subscriber retention. With 20% of subscribers planning to cancel after initial discounts, BNPL can transform temporary discounts into lasting commitments, encouraging continued engagement.

A Strategic Lever for Growth

The recent surge in BNPL adoption illustrates its growing importance for subscription merchants, particularly during peak shopping seasons. Square sellers using Afterpay reported a striking 47% increase in BNPL transactions during the 2023 holiday season, showcasing the payment model’s ability to enhance sales and operational efficiency when consumer demand is high.

BNPL also plays a vital role in reducing subscriber churn by simplifying payment processes and providing flexible terms. By introducing tiered options and personalized plans, merchants can move toward elevated loyalty and engagement. As the subscription economy evolves, adopting BNPL becomes essential for merchants looking to gain a competitive advantage, strengthen consumer relationships and explore new avenues for growth.