BNPL usage soars as holiday shoppers turn to flexible payments

By Vriti Gothi

Buy Now, Pay Later (BNPL) has hit its highest-ever adoption during the holiday shopping season, according to a new study from Digital Silk, a development that signals not only what Americans are buying with instalment plans, but why they are increasingly turning to them. The data shows U.S. shoppers pushed nearly $1 billion in Cyber Monday purchases through BNPL this year, underscoring how flexible payments have moved from a convenience feature to a financial coping mechanism for consumers facing tight budgets. At the same time, merchants are embracing BNPL as a strategic lever to drive conversion in a highly competitive online retail environment.

Digital Silk’s analysis, which aggregates insights from leading retail trackers and industry research, found that Cyber Monday BNPL spending rose to nearly $1 billion, up from $940 million in 2023 and $658 million in 2022. This marks the third consecutive year of double-digit growth in instalment-driven online purchases on one of the most critical shopping days of the year. The sustained rise points to a fundamental realignment in consumer spending behaviour: shoppers are increasingly using BNPL to manage cash flow rather than to finance occasional big-ticket items.

Across the holiday season, BNPL spending surged to $18.2 billion, reflecting a 9.6% year-over-year increase. Digital Silk notes that up to 6% of all U.S. eCommerce spending now runs through platforms, with the average American spending close to $2,000 annually via these services. These figures place BNPL firmly in the mainstream of U.S. digital payments, a sharp contrast to just a few years ago, when instalment services were still regarded as niche alternatives to credit cards.

The study highlights that Cyber Monday served as a turning point, exposing what it describes as a “deep behavioural pivot.” Consumers, particularly those feeling the strain of rising living costs, appear to be relying on BNPL as a tool for financial stability rather than aspirational purchasing. This mirrors broader economic trends: persistent inflation, stagnant wage growth in certain income segments, and a growing reluctance to take on revolving credit card debt. BNPL, with its transparent repayment schedules and zero-interest options, offers a degree of predictability that traditional credit products often lack.

Retailers have also become key drivers of this growth. As competition intensifies during the holiday season, checkout optimisation has become a make-or-break factor in conversion rates. The absence of BNPL at checkout is now cited as a leading cause of cart abandonment in categories such as electronics, apparel, and home goods. Digital Silk notes that merchants increasingly view BNPL as a competitive necessity, with many incorporating multiple providers to broaden customer reach and reduce friction.

For the FinTech sector, the surge in holiday BNPL activity brings both opportunity and scrutiny. Rising volumes highlight strong consumer demand and open pathways for product innovation, including loyalty-linked installments and bank-partnered BNPL models. At the same time, the rapid shift toward BNPL as a default payment method is expected to draw further regulatory attention. U.S. policymakers have already raised concerns about transparency, indebtedness, and credit-reporting standards issues that are likely to gain urgency as BNPL becomes further embedded in everyday financial behavior.