Is Buy Now, Pay Later here to stay? Here’s what the data says

The Ipsos Consumer Tracker asks Americans questions about culture, the economy and the forces that shape our lives. Here's one thing we learned this week.

According to the latest wave of the Ipsos Consumer Tracker, half of Americans have “purchased an item and paid for it in installments” — a figure that includes the growing range of Buy Now, Pay Later (BNPL) options. And while one in three of those BNPL users is still carrying a balance, half say they’d use it again. 

These are impressive figures, and suggest alternative financing options have quickly closed the gap with more conventional forms of credit — particularly among younger consumers. Still, most Americans say they still prefer their credit cards. 

A quick recap: boosted by pandemic-era trends like stimulus savings, online shopping, and (of course) low interest rates, BNPL quickly became one of the fastest-growing developments in the financial service space. The option to pay in installments was rolled out nearly everywhere consumers could make a purchase — from the practical (laptops) to the concerning (groceries) to the bizarre (pizza).

But these options didn’t just become omnipresent at the checkout page— for many Americans, they became genuinely useful. And in time, they became particularly appealing to younger audiences and those distrustful of conventional credit. As Kevin Hung, SVP and senior client officer at Ipsos, recently wrote for forbes.com: 

BNPL’s immediacy, certainty, and accessibility have collectively created a sense of positivity around these programs. They seamlessly blend in with the purchase experience, payment terms are easy to understand, and there are no lingering obligations or management tasks required of the customer once all payments have been made.

So, what does the data say? 

There are certainly repeat customers — and those repeat customers are likely to be young. Americans aged 18-34 are twice as likely as those over 55 to prefer BNPL over credit cards, and nearly twice as likely (44% to 25%) to use both BNPL and credit cards.  

Still, when taken in aggregate, just a third of Americans prefer BNPL to credit cards. That gap could certainly be attributed to the fact that BNPL offers don’t build credit or provide rewards. (And we know from wave 95 of the Ipsos Consumer Tracker that Americans really like their credit card rewards). But the answer varies by income: 35% of Americans with household incomes under $50k and 38% of those making $50k-$100k favor BNPL, compared with 24% of those making $100k+ or $125k+. 

About one in three of those who have used BNPL still carry a balance. That figure is actually being lower among the lowest-income Americans, though 38% of those making under $50k are worried about paying off their balance (along with a not-insignificant 18% of those netting over $100k per annum). And those fears are, again,  much more prominent among younger Americans than older ones — which lines up with previous Ipsos Consumer Tracker data on consumer debt. 

What does that mean for the long term? 

It remains to be seen whether adoption of BNPL will grow or slow. But in the meantime, the economy that facilitated BNPL’s rise has gone away. Ipsos data suggests consumer confidence is holding steady in the U.S. But amidst stubbornly high interest rates and cooling wage growth, many are cutting their spending on big purchases and non-essentials — BNPL’s typical  bread and butter. 

And it’s not just economic headwinds: in recent months, BNPL has been under increased scrutiny both from regulators and from providers (including tighter BNPL rules from the likes of NatWest and Chase, and Apple closing its own BNPL option altogether). 

Will tomorrow’s shoppers pay out of pocket, or in installments? Check out What the Future: Shopping for a look at how the payments field will evolve, or subscribe to one of our newsletters to stay in the loop. 

More insights from this wave of the Ipsos Consumer Tracker:

Americans' personal outlook is pretty positive

Here’s what makes somewhere the best place to live

The Ipsos Care-o-Meter: What does America know about vs. what does America care about?