Buy Now, Pay Later: How Demographics Influence Payment Choices for Shoppers

Have you ever gone to pay for something and realized you don’t have your credit card? With millions of cards in the US,¹ credit is one of the most popular payment types. But today there are other options. You could get out your phone and buy that coffee with an app or with a QR code. You may even be able to pay with payment apps, like Venmo. If you’re shopping online, you can use stored cards, digital wallets and the latest addition: buy now, pay later (BNPL).

Shoppers today have more choices than ever, and offering the right payment methods, including BNPL, can help businesses reach new demographics and encourage conversion. Here are some things to consider to help serve the specific needs of your customers.

Digital adoption is accelerating among Boomers and Gen X

When you think of Baby Boomers and Gen X, you may think of traditional credit cards – but the times are changing. Shifting consumer habits among these generations are ushering in a new era of digital adoption. By 2025, Gen X and Boomers are expected to make up almost 45% of BNPL users.²

Baby Boomers are becoming more technologically savvy. The traditional line of thinking that Baby Boomers simply aren’t digitally savvy may not be true. In fact, 92% of Baby Boomers have smartphones.³ And 47% own a tablet.⁴ The most surprising? About a third of Baby Boomers have adopted smart watches.⁵ Along with the fact that Boomers also increased their digital spending during the pandemic,⁶ we could be seeing a rise in digital behaviors that contributes to the adoption of BNPL.

Gen X is adopting payment alternatives. Gen X has the highest average debt of any generation.⁷ Some of this can be attributed to their life stage – for example, they’re more likely to own their home than those under age 35,8 but may not have paid it off yet, as Baby Boomers may have. Gen X also has the highest average student loan debt.⁹ Both these factors may help to explain why they’re looking to options like buy now, pay later installments.

Younger generations are using new payment methods

Millennials are the largest generation. Together with Gen Z, the two make up 42% of the population.¹⁰ These are the generations that are driving the digital transformation – and could be driving widespread adoption of new payment types. But what drives them?

Millennials remain budget-conscious. While the median weekly earnings of millennials aren’t too far behind their older cohorts,¹¹ millennials do have a lower disposable income.¹² That could be why they’re more concerned about their financial future than other generations.¹³ They’ve also been quick to adopt buy now, pay later, with 39% saying they’ve used interest-free payment and installment services in the past year.¹⁴

Gen Z wants a great user experience. Unlike other generations, Gen Z shops as much online as they do in-store.¹⁵ They also have less patience for poor experiences, and are more likely to post a bad review after they’ve had one. While Gen Z’s use of BNPL is second only to millennials, with 49% having used it,¹⁶ businesses may need to provide a more seamless experience to truly capture this generation’s interest.