Gen Z shopping

Gen Z Drives Growth of ‘Buy Now, Pay Later’

Fueled by the inflationary economy, Buy Now, Pay Later (BNPL) options continue to grow in availability and resonate with Gen Z as a convenient and simple payment method.
Elizabeth Christenson
Editor, Retail Leader
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Buy Now Pay Later

New research reports that 48% of Gen Z consumers have used Buy Now, Pay Later (BNPL) for purchases in the last three months, with more than 1-in-5 saying that they’ve used BNPL more than three times in the last three months, according to “Billtrust’s 2022-2023 Gen Z and Digital Payments Study.” Highlighting the potential danger of this adoption is the fact that Gen Z has seen their credit card debt rise significantly higher than other generations this year.

Called Gen Z’s credit card, BNPL is a form of installment loan that divides purchases into multiple equal payments, with the first due at checkout and the remaining billed to a debit or credit card until a purchase is paid in full. Gen Z makes up 55% of user penetration in the space, and Katie Horton, a representative from Billtrust’s marketing team, told Retail Leader Pro the cohort is taking advantage of it at a greater rate because BNPL has been more widely available within the Gen Z era.

Overall, a study from Juniper Research has found that consumer spending using BNPL platforms will reach $437 billion globally in 2027; rising from $112 billion in 2022. This sizable growth of 291% will be driven by escalating financial pressures from the rising cost of living, increasing the demand for cheap credit solutions.

Simplicity of BNPL

Gen Z — as all generations do — use credit and debt as a way to finance purchases. A study from TransUnion found that 50% of “credit-active” Gen Zers in the U.S. have a credit card. While not surprising, it opened the door for Gen Z to adopt newer forms of credit and debt, such as BNPL options.

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“The simplicity of the presentation of BNPL is hard to beat,” Horton said. “It's often presented at the payment portion of the customer-shopping journey. And customers often know within seconds whether or not they qualify to pay for their purchase at a later date. I believe this option is preferred in part versus credit cards, because with BNPL there's often little to no interest rate and less required minimum purchases that many credit cards include.”

BNPL can be a great option for some consumers, but if used haphazardly it easily leads to debt trouble. BNPL also lacks many of the consumer protections that come with credit cards. Considering the fact that Gen Z saw their credit card balances increase by 30% in the second quarter compared to a year ago (versus the rest of the population seeing an 11% rise in their balances), it also exposes the risks that these younger generations face when using these newer models amid a backdrop of inflation and economic uncertainty, Billtrust reported.

“Similar to the dangers of accruing too much credit card debt, consumers must be aware of the fact that selecting an option to pay later doesn't mean an item is free or costs less — it simply means that they have more time to pay for it,” Horton said. “With that in mind, the danger lies within the self-control and self-regulation on the part of the consumer to remain aware of when their payments are due.”

BNPL Purchasing

Some reports say Gen Z uses BNPL for essential products like household items as well as clothing and accessories. Reports also show that luxury items are purchased with this option, as it splits the payments up to be a more affordable option.


For all U.S. shoppers, clothing and shoes was one of Klarna’s (which offers a suite of payments, shopping and banking services), top three most popular shopping categories during Black Friday week this year. Online purchase data from Klarna found that casual and smart-casual styles rose in popularity among U.S. shoppers during the week of Thanksgiving (Klarna's Shopping Index is calculated based on the number of sold items online in the U.S. and reflects the trends regardless of overall category sales growth.):

  • Klarna’s shopping index reveals that rugby shirts (+71%), boxers (44%), oxford shirts (+38%), chino pants (+35%) and jeggings (32%) were bought more often than other clothing and shoe products the week of Black Friday, compared to the week prior.
  • Ballerina slippers (+60%), pumps/court shoes (+35%), brogues (+25%) and platform shoes also (+23%) gained traction among consumers over the same time period. 

BNPL in 2023

Of course, Gen Z’s adoption of short-term financing options like BNPL are evidence of their desire for convenient payment methods. Their pursuit of fast and seamless customer experiences is a key trait in general, Billtrust’s study reported.


Horton believes we will continue to see offerings of BNPL with consumer goods and retail products along with increased usage, not just within the Gen Z cohort, but with millennials and other demographics.

“Retailers should consider that strategically using BNPL promotions might increase their business, especially within the Gen Z demographic,” she said. “In fact, it may be the only way that some of these consumers can have access to purchasing higher-ticket items that they may not ordinarily be able to buy. If retailers want to open up the possibility of harnessing Gen Z's buying power, then considering this option might be a strategic move.”

In general, consumers prefer and, in some cases, need to pay in a myriad of ways ranging from tapping their digital wallets to paying with government benefits. 

“From enabling payment options like BNPL, PayPal and pay-by-bank across channels to allowing consumers to receive payouts instantly into the account of their choice, businesses increasingly view payments as an opportunity to maximize customer choice and create loyal experiences,” Casey Klyszeiko, Fiserv’s senior vice president and head of global e-commerce and Carat, told Retail Leader Pro. “As consumers navigate economic headwinds in 2023, offering more payment choice will provide much needed optionality and flexibility as they look to pay and be paid using options that best fit their financial needs. Brands will increasingly invest in payment choice in 2023 to create experiences that drive loyalty as they enable people to navigate their financial lives.”

As an indication of BNPL’s further growth,  according to CNBC, One, a fintech company jointly backed by Walmart and investment firm Ribbit Capital (one of the venture capital firms behind Robinhood), plans to launch a BNPL service that consumers could use online and in-store at Walmart as well as other retailers.

Elizabeth Lafontaine
Elizabeth Lafontaine, RL Pro Chief Retail Analyst

RL Pro Analyst Take 

About three to four years ago, I began to notice a lot of e-commerce sites offering options to pay in installments. At the time, it was mostly utilized by luxury brands or speciality offerings, and I often wondered how much this trend would catch on with the consumer. The term Buy Now, Pay Later (BNPL) was in its infancy, but giving consumers the chance to break up the payments on their purchases ensured that they had more flexibility in spending. The premise itself is pretty genius, especially for consumers with poor credit or those who don’t want to rely on using credit. This new concept created for e-commerce shopping and the digital age caught on with consumers and appears to be poised for even more growth in the next year as new players like Walmart enter the space and economic uncertainty looms. Giving consumers the flexibility to pay how they want in ways that make the most financial sense for their families could be expanded across retail sectors. BNPL currently is most highly penetrated in general merchandise, but imagine how these options could help shoppers with grocery purchases or online grocery delivery. This could also help with warehouse club shopping occasions that tend to be higher single purchases. Splitting up weekly grocery bills or other essential purchases like prescriptions or gas, could keep some consumers from accruing additional credit card debt. Many BNPL providers currently operate as a third-party option, but opportunities definitely exist for supermarkets to partner with these services to offer another service to their customers. BNPL is a concept quickly being adopted by Gen Z consumers, and as they continue to age into later life stages, BNPL may offer long-term solutions at retail for this group.