According to a recent survey by PayPal, half of holiday shoppers are more likely to complete their purchase if they can use buy now, pay later options. PayPal General Manager of Small Business and Financial Services, Michelle Gill, stated that offering buy now, pay later leads to a 91% higher average order value for enterprises and 62% higher for small businesses.
PayPal is the most commonly used buy now, pay later service, as reported by a BankRate survey earlier this year. Gen Z and millennial shoppers are most likely to use buy now, pay later for holiday shopping, with one-in-four members of both generations regularly using the service. Affordability and budget control were cited as primary reasons for using buy now, pay later.
Buy now, pay later has become a part of everyday shopping for many U.S. consumers, with Americans expected to spend $116.7 billion via these services by the end of 2025. The Federal Reserve reported that 82% of people use buy now, pay later for convenience, and 72% of users making less than $50,000 use it because it’s the only way they can afford certain purchases.
A Lending Tree survey earlier this year found that nearly a quarter of buy now, pay later users are financing their groceries, up from 14% the prior year. While this is a win for providers, financial experts and officials have warned that it can be risky for shoppers, especially those with existing budget problems.
Nearly a quarter of all users had at least one missed payment from May 2024 to this past May, according to The Fed, with lower-income shoppers having a higher rate of missed payments. Some buy now, pay later services don’t charge late fees, but others fine users as much as $15 per late payment.
It’s important for shoppers to be aware of the risks associated with buy now, pay later services and to use them responsibly to avoid financial difficulties.
