Buy Now Pay Later (BNPL): The New Face of Consumer Credit

Introduction

Buy Now, Pay Later (BNPL) is no longer a niche payment method—it has become a cornerstone of consumer credit behavior. As inflation, rising interest rates, and tighter household budgets reshape spending habits, BNPL offers consumers a flexible way to manage cash flow without resorting to traditional credit cards. For retailers, it has become a powerful conversion tool; for consumers, a form of short-term credit that blends convenience with perceived affordability.

The latest data shows that BNPL adoption is stabilizing across age groups, but with notable shifts. The largest growth is among consumers aged 35 to 64, where usage rose by 5% year-over-year, surpassing 2.8 million users. By contrast, the youngest segment, 18 to 24 years old, saw a 6% decline, losing about 50,000 users. This signals that BNPL is moving beyond being a “young consumer trend” and becoming mainstream across mature demographics.

Equally important is how consumers use BNPL. The number of transactions per user has risen across all groups. In particular, consumers aged 65 and over—traditionally late adopters—are rapidly catching up, increasing their BNPL activity by around 40% in one year (from 4.4 to 6.3 annual transactions). Users under 65 already average 10 BNPL transactions per year, making this one of the most frequent consumer credit behaviors in today’s payment ecosystem.

Together, these trends reveal two forces at play: BNPL is maturing as a product (expanding from youth-driven to mainstream adoption), and consumer reliance on it is deepening (with more transactions per user across all ages). As such, BNPL is reshaping not just how consumers pay, but how they think about short-term credit and affordability in an era of economic uncertainty.

BNPL Market Size

The global Buy Now, Pay Later (BNPL) market is on a steep growth trajectory, reflecting both consumer demand for flexible credit solutions and the rapid integration of BNPL into e-commerce ecosystems. In 2024, the market was estimated at USD 19.22 billion. By 2025, it is expected to expand to USD 23.37 billion, and forecasts project a rise to approximately USD 83.36 billion by 2034. This represents a compound annual growth rate (CAGR) of 15.18% between 2025 and 2034.

This sustained expansion highlights the shift in consumer payment preferences, particularly in digital commerce. The appeal of interest-free installment plans, transparent repayment schedules, and frictionless integration at checkout are making BNPL a mainstream alternative to credit cards.

The forecast data shows a steady and accelerating upward trend:

• 2025–2027: The market grows from USD 23.37B to USD 34.64B, reflecting early scaling as adoption becomes more widespread.

• 2028–2030: Growth accelerates past USD 55B, supported by deeper penetration in retail, travel, and consumer services.

• 2031–2034: The market is set to nearly double again, crossing USD 83B, signaling BNPL’s transformation from a niche offering to a global credit infrastructure.

This exponential growth underlines the importance of BNPL as more than a payment option—it is evolving into a core pillar of consumer credit behavior. Retailers increasingly view BNPL partnerships as strategic levers to boost conversion rates, while consumers use it as a tool for budget management and financial flexibility.

Market Share in Domestic E-Commerce Payments

The penetration of Buy Now, Pay Later (BNPL) in e-commerce payments varies significantly across countries, reflecting differences in consumer preferences, regulatory frameworks, and retail ecosystems.

At the global level, BNPL’s share of domestic e-commerce payments has grown steadily from just 0.4% in 2016 to around 5% in 2024. While this may appear modest, the rise represents a tenfold increase in less than a decade, signaling BNPL’s transition from a niche product to a standard checkout option worldwide.

Looking at leading markets, Sweden, Germany, and Norway dominate adoption rates.

• Sweden remains the most mature BNPL market, with penetration consistently above 20% since 2020, peaking at 25% in 2019 and holding steady at 23% in 2024. This is largely driven by Klarna’s strong domestic presence and consumer familiarity with invoice-based payments.

• Germany also shows remarkable adoption, growing from 3% in 2016 to around 20% in 2024, supported by a culture of deferred payments and strong BNPL integration with local merchants.

• Norway follows a similar path, with BNPL reaching 18% of e-commerce payments in 2024, reflecting Nordic consumers’ early adoption of digital payment innovation.

By contrast, the United States is still a developing market for BNPL, with penetration at just 6% in 2024. Although relatively small compared to Europe, the U.S. has significant growth potential given its large e-commerce base and rising consumer awareness of flexible payment options.

These contrasts highlight two important dynamics:

1. In Europe, BNPL is already a mainstream payment method, embedded in the shopping experience and accounting for a significant share of online transactions.

2. In North America and globally, adoption is still in its early stages, but the trajectory suggests rapid catch-up as BNPL providers expand partnerships and consumers seek alternatives to credit cards.

Overall, while the global share stands at 5%, the disparity between leading European markets (20%+) and the U.S. (6%) illustrates BNPL’s uneven adoption curve. This divergence also signals where the next phase of growth will occur: in large but underpenetrated markets like the U.S., Canada, and emerging economies.

BNPL Usage by Income Level

BNPL adoption is not uniform across income groups; instead, it reflects two distinct behavioral patterns: usage by choice and usage by necessity. The data reveals a clear income divide that shapes how consumers perceive and rely on BNPL services.

Among higher-income households, BNPL is primarily a strategic financial choice. Roughly 25% of consumers earning over USD 100k report using BNPL because they prefer the flexibility it provides, while only 5.7% rely on it out of necessity. For these consumers, BNPL acts as a cash flow management tool—spreading out payments without incurring credit card debt or interest.

Middle-income households (USD 50k–100k) show the highest overall voluntary adoption, with 26.6% using BNPL by choice. However, necessity-based use is also notable at 12.2%, reflecting a balance between convenience-driven users and those who depend on BNPL to access goods and services they might otherwise postpone.

The most concerning trend is seen in lower-income households (under USD 50k). Here, BNPL is predominantly a necessity-driven tool, with 26.9% of consumers using it out of financial need, compared to only 2.2% who use it by choice. This indicates that for a significant share of low-income users, BNPL functions less as a convenience and more as a lifeline to manage affordability in everyday purchases.

These findings underscore the dual nature of BNPL:

• For affluent consumers, it is a preference-driven product, aligned with flexibility and convenience.

• For lower-income consumers, it is increasingly a credit substitute, highlighting potential risks of over-indebtedness and financial vulnerability.

This divergence suggests that while BNPL is marketed as a universal payment solution, its socioeconomic implications vary widely. For policymakers and regulators, this raises questions about consumer protection, especially for vulnerable groups who may become overly reliant on installment-based credit.

BNPL Usage by Category

The types of purchases consumers use Buy Now, Pay Later (BNPL) for vary significantly, highlighting where the product has the most impact. According to recent survey data:

• Clothing & Fashion leads BNPL usage, with 42% of respondents using the service for apparel-related purchases.

• Electronics & Gadgets follow at 32%, reflecting consumer interest in spreading payments for higher-ticket technology items.

• Furniture & Home Decor accounts for 26%, while Home Appliances come next at 22%, showing that BNPL facilitates access to durable goods.

• Groceries & Everyday Items (19%) and Personal Travel (18%) indicate that BNPL is extending into routine and lifestyle expenses.

• Home Improvement ranks lowest at 17%, but still represents a meaningful share of usage for remodeling and renovation purchases.

This distribution illustrates that BNPL adoption is strongest for discretionary spending, particularly categories with higher perceived value or purchase complexity. It also demonstrates the versatility of BNPL, spanning both essential and non-essential items, and its role in making mid- to high-cost purchases more accessible for consumers across income levels.

BNPL Usage and Overdraft Risk by Age Group

The data shows a clear correlation between the frequency of BNPL usage, age group, and the likelihood of prolonged overdrafts. Younger consumers (18–20) show lower exposure: only about 10% of BNPL users in this group are overdrawn for more than 30 days, and fewer than 6% face overdrafts extending beyond 90 days.

By contrast, consumers aged 25–34 are much more financially stretched. Roughly 26% of BNPL users in this group remain overdrawn for over 30 days, and nearly 1 in 5 are stuck in overdrafts longer than 90 days. This highlights how BNPL reliance intensifies with age, likely reflecting greater financial obligations such as housing, childcare, and insurance.

The frequency of BNPL use further amplifies this risk. Among heavy users (13+ BNPL transactions per year), 27% spend more than 30 days in overdraft, compared to just 20% among lighter users (1–4 annual transactions). Even more strikingly, nearly 19% of heavy users endure overdrafts beyond 90 days, suggesting that BNPL may not simply be a convenience tool but a coping mechanism for ongoing financial strain.

Overall, the evidence underscores that BNPL use and overdraft exposure are intertwined, particularly for older and more frequent users. This raises questions about the financial sustainability of BNPL habits and their long-term impact on consumer debt.

Conclusion

Buy Now, Pay Later (BNPL) has evolved from a niche payment method into a mainstream pillar of consumer credit, reshaping how individuals manage spending and how retailers drive sales. The data shows that adoption is no longer confined to younger consumers; adults aged 35–64 and even those over 65 are increasingly embracing BNPL, both in terms of user numbers and transaction frequency. This demographic shift underscores BNPL’s maturation as a financial product, moving beyond trend-driven usage toward broader, sustained adoption.

The market outlook reinforces this transformation. With global BNPL volumes projected to reach over USD 83 billion by 2034, the sector is growing at a pace that signals its emergence as a core component of digital commerce. However, adoption remains uneven across regions. While Europe leads with penetration rates above 20%, the United States and other large markets remain underpenetrated, representing significant opportunities for growth as consumers seek alternatives to traditional credit cards.

Income-level analysis reveals a nuanced picture of BNPL’s role. For higher-income consumers, it functions largely as a strategic tool for financial flexibility, whereas for lower-income households, it increasingly serves as a necessity-driven form of credit. Combined with the data linking heavy BNPL usage to extended overdraft risk, these findings highlight both the empowerment and potential financial vulnerability associated with BNPL.

In essence, BNPL is redefining the consumer credit landscape. It offers unparalleled convenience and flexibility, yet it also introduces new challenges for financial well-being, particularly for those relying on it out of necessity. As BNPL continues its rapid expansion, stakeholders—including retailers, regulators, and consumers—must balance the benefits of innovation with the responsibility of ensuring sustainable, safe credit practices.

Sources and References:

10th Edition GPR 2025 — The past, present and future of consumer payments

https://offers.worldpayglobal.com/rs/850-JOA-856/images/GPR25.pdf

Buy Now Pay Later Market Size and Forecast 2025 to 2034

https://www.precedenceresearch.com/buy-now-pay-later-market

Buy Now Pay Later Market Trends & Statistics

https://www.digitalsilk.com/digital-trends/buy-now-pay-later-bnpl-statistics/