Buy Now Pay Later (BNPL) services have continued to grow, with a notable increase in adoption among younger consumers. According to the newly released J.D. Power report, the number of people using BNPL products rose sharply compared to the previous year. This growth was especially evident when shoppers preferred flexible payment options during the holiday season.
“The BNPL segment has undoubtedly grown in popularity, with more customers using these services than ever before. That’s been especially true around seasonal periods of higher spending, such as the holidays. Card-based BNPL products continue to lead the charge on satisfaction, as issuers are leveraging their existing brand awareness and equity to retain would-be defectors,” said Sean Gelles, senior director of banking and payments at J.D. Power.
Younger consumers favour BNPL over credit cards
Millennials and Gen Z are leading the charge in BNPL adoption, with 42% of these consumers using BNPL services, compared to 21% of older generations. A striking trend emerged during the latest survey wave, which covered the 2024 holiday season: for the first time in the study’s history, more Gen Z consumers reported choosing BNPL over credit cards.
Many younger shoppers seek flexible repayment options and competitive terms, making BNPL an appealing alternative to traditional credit.
Millennials report the highest satisfaction
Millennials expressed the highest satisfaction with their BNPL providers among all generational groups, scoring an average of 627. Their choice of BNPL service is often influenced by convenience, affordability, recommendations from family members, and trust in the brand.
Although Generation X had a lower adoption rate at 29%, they still reported relatively high satisfaction, giving BNPL services a score of 620. Meanwhile, Gen Z users followed closely behind with a satisfaction score 617.
BNPL services offered by traditional credit card issuers received particularly strong ratings in the study. These card-based solutions stood out for their ease of use, strong security features, and seamless digital account management.
In addition, these services benefit from the established trust and familiarity consumers already have with legacy financial institutions, further boosting their appeal.
Satisfaction declines for Zip and PayPal
Despite the overall growth in BNPL usage, not all providers maintained strong customer satisfaction. The study revealed significant declines for two major players—Zip and PayPal—whose satisfaction scores dropped by 30 and 35 points, respectively.
This decline contributed to an overall 13-point drop in industry-wide BNPL satisfaction, highlighting consumers’ increasing expectations for these services.