Is BNPL’s future hinged on millennials as a major user group?

By Puja Sharma

Today, online retailers throughout the world accept credit cards for small and large purchases. The BNPL market now generates more than $100bn annually. An Afterpay report estimates that 12% of online fashion retail purchases are made through BNPL providers.

Short-term loans in today’s time are called BNPL. With Buy Now, Pay Later consumers benefits such as softer credit checks and low to 0% interest rates. They are also available directly within the eCommerce checkout flow, whereas loans are a different, more varied process.

“purchase now, pay later”: It is not permissible for retailers to advertise that they accept credit cards in their emails and social media marketing campaigns. Consumers may not be aware of BNPL, which is why such an option may be worth promoting in ongoing marketing campaigns. Despite consumer interest, it is still uncommon for retailers to offer a buy now and pay later option at checkout. Social media marketing to increase awareness among customers works well to increase their awareness.

As many as 12% of all online fashion purchases in the United States are made via BNPL, and the range of products available for installment payments is expanding rapidly. It will be possible to Buy Now, Pay Later for more than just tangible goods.

Rewards and incentives

It creates an ecosystem of loyal and active repeat customers when consumers use to buy now, and pay later regularly. The ability to discover brands and stores that offer specific BNPL providers from a provider’s shopping marketplace is improving.

A broader range of payment options

It was the concept of buying now, paying later (or “pay in four”) that drove the initial wave of popularity. These BNPL companies are growing and continuing to see billion-dollar annual successes, so they can offer even more flexible payment options, such as lower interest rates or longer loan terms.

On average, younger consumers use BNPL more than the rest of the sample. BNPL has been utilized by 6.2% of millennials, and slightly more than 5% of bridge millennials to purchase physical goods. When consumers transact online, the gap between older and younger shoppers becomes more pronounced. Every month, 10.2% of millennials use BNPL. As of spring of this year, the number of Generation Z users has risen from 2% in the winter of 2022 to nearly 7%.

The PYMNTS study found that Generation Z consumers who live paycheck to paycheck and struggle to pay their monthly bills report the lowest average savings at just $1,158. A median of $3,731 has been saved by millennials who live paycheck to paycheck and struggle to pay their monthly bills. As consumers age, savings amounts decrease.

The majority of young consumers use BNPL to make purchases of everyday items like clothes, shoes, and accessories, while about 35% use it to purchase consumer electronics. Payment methods have evolved over the past several years to streamline the purchasing process. Among these methods are Apple Pay, Google Pay, and PayPal Checkout, as well as installment payment methods such as Affirm, and Afterpay, among others. Payment plans are the next wave of payment options that consumers can take advantage of in the form of “buy now, pay later” (BNPL), giving retailers a more affordable option to offer shoppers.