Consumer habits and preferences are evolving at a rapid pace around the globe. Technological advancements coupled with increasing awareness of different products and services are the main drivers of this change. 

In this article, we will focus on how consumers are becoming increasingly comfortable with buy now, pay later (BNPL) payments methods. At least that statement holds true when it comes to Gen Z and millennials. 

Consumers are spending more time shopping online than ever before due to the COVID-19 pandemic. This has triggered a great interest in alternative payment methods to credit and debit cards. 

This trend has given birth to multiple BNPL services which include Afterpay, Klarna, Affirm, and PayPal Credit to name a few. 

Let’s dive in straight to understand why the younger generation has embraced BNPL and whether this trend will gain further popularity. 

SEE ALSO: Afterpay inks deal with 13 major brands including Amazon & Target

Why do Millennials and Gen Z love BNPL?

Gen Z consumer

According to eMarketer, nearly 75% of BNPL users across the U.S. are millennials or GenZ [1]. In addition, it is predicted that Gen Z will dominate the BNPL market share in the next four to five years as they are growing into the digital shopping age. 

But what makes BNPL so attractive? The answer is financial flexibility. Such financial services offer greater flexibility to this cohort especially when cash flow is unpredictable. 

In addition, BNPL allows customers to receive their orders immediately while deferring the full cost by paying them off with multiple installments. This option helps young consumers make purchases they cannot afford easily or pay for them upfront.

The idea of blending BNPL with a mobile payment application and as a payment option during checkout has become an instant hit with shoppers in the U.S. and UK. 

Younger consumers with lower wages are the top adopters of this service. Looking at the current developments in the BNPL space, this trend will continue in the upcoming years.

Younger customers are also more digitally sound and are not very apprehensive about mobile shopping. This consumer group is also on the lookout for new age and user-friendly personal finance options. BNPL apps tick all the boxes, which is why it continues to receive a commendable response from consumers. 

BNPL Popularity Linked with 2008 Economic Downturn

Economic recession

Some financial experts have even suggested that the 2008 economic downturn could potentially be the reason why BNPL is so successful today. They pointed out that the younger generation especially in the U.S. grew during the recession and that may have influenced their financial choices. 

Credit card debt was strongly linked with the economic recession. This is another reason why consumers were looking for new financing options. 

A survey conducted in the first quarter of 2021 revealed that around 66% of millennials do not have a credit card. The survey also found that BNPL services are also useful as they allow consumers to borrow money without a credit check. 

Growing Investor Interest and Demand Fuels BNPL’s Growth

BNPL services have been around for a while. The concept is not entirely new. However, a surge in investments and growing consumer awareness have shaped the growth of BNPL in recent years.

Besides, mergers and acquisitions along with new product launches have continued to nurture the BNPL industry. For instance, in the first week of August, Square announced plans to acquire Afterpay in a $29 billion stock deal. 

According to Bloomberg, Apple is joining forces with PayBright to roll out an installment program for Apple devices purchased in Canada. 

Multiple merchants are partnering with financial technology (fintech) firms to provide BNPL services. Even credit card companies and banks are rolling out similar services to compete with BNPL service providers. 

While millennials are the biggest spenders in the BNPL circuit, Gen Zs are also upping their game. Some BNPL service providers are also turning their focus toward baby boomers and Gen X customers in the upcoming months. 

Hidden Risks of BNPL

While BNPL has thousands of takers around the world, it has come under the gun for a myriad of reasons. 

Although BNPL is an excellent option for young consumers with an unsteady cash flow, there are risks involved. Users may not even be aware of the potential risks. 

Consumers may be subject to interest charges and fees if they miss their payments. The interest rates involved are similar to those of retail cards. So it is important that they are aware of these technicalities. 

 Another drawback is that they may even have a tough time getting a refund on their purchases even if they are defective. 

The biggest risk with BNPL is overspending. There is a high chance that consumers will get carried away and purchase more than they can repay. Another reason why BNPL may not be the best option is that some lenders do not report on-time payments to credit reporting agencies. However, when a payment is missed, they will waste no time reporting it. So, if your agenda is to build a good credit score, you should understand the intricacies involved. 

Final Words

So getting a glimpse of both sides of the story, what is your take on this modern-day and convenient financial service? Is BNPL worth the hype? Well, let’s admit that there are a few things you need to be aware of when you choose to use this service. 

When it comes to financing, there is always an element of risk involved. Having said that, there are a few general rules you should follow to avoid troubled waters. 

BNPL is here and it is not going anywhere! It is clear that the concept is a hit for the younger generation. In addition, fintech companies are taking measures to prevent frauds and scams tied to these payment services. 

While the millennials have more or less embraced BNPL with open arms, even the older cohort of customers are swaying toward it. 

So the question is, will BNPL gain mainstream acceptance? Time will tell. Drop your thoughts below and tell us what you think.

SEE ALSO: Sezzle plans IPO in the US to cash in on BNPL boom

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[1] (2021) “Almost 75% of BNPL users in the US are Gen Z or millennials” Insider Intelligence [online] Available from: [accessed August 2021]

[2] Backman. M (2021) “Study: Buy Now, Pay Later Services Continue Explosive Growth” the ascent [online] Available from: [accessed August 2021]