Report: Millennials, Buy Now Pay Later And The Shifting Dynamics Of Online Credit

It has been suggested that millennials are averse to having and using credit cards. New PYMNTS research shows such assumptions are off-base, however, as is often the case with generational stereotypes.

Millennials are in fact as likely as other generations to have credit cards, with nearly nine out of 10 having at least one card, according to PYMNTS’ latest research. While credit is an important part of millennials’ shopping lives, this generation has unique spending priorities, particularly when it comes to online shopping — and these priorities are looming even larger since the pandemic shifted much of commerce online. Many millennials are looking for flexible yet responsible ways to pay for specific purchases in categories like clothing, electronics and furniture.

Millennials have shown remarkable interest in buy now, pay later (BNPL) solutions, which allow consumers to finance purchases with specific terms when they check out online. BNPL is not a last resort for millennials, but rather part of an array of credit tools they can access. Millennials lead in the early adoption of BNPL, especially older “bridge millennials,” or those aged 32 to 41 who tend to have more purchasing power than their younger counterparts. PYMNTS research shows 11.5 percent of bridge millennials have used BNPL, close to double the average. This group has also increased its usage of BNPL, a 28 percent rise since March — more than any other generation since the onset of the pandemic.

These are among the key findings to emerge from Buy Now, Pay Later: Millennials And The Shifting Dynamics Of Online Credit, which is based on two surveys, totaling nearly 15,000 U.S. consumers, that were conducted in March and September. The study thus tracks how payment preferences have evolved over the course of the pandemic, when consumers increasingly took their shopping activities online.

The PYMNTS study offers key insights into why BNPL is gaining traction among consumers overall, and millennials in particular. BNPL users regard the financing solution as a budget-conscious way to make purchases. Nearly 42 percent cite clarity of terms as a key priority when making purchases online, and 39.1 percent cite the ability to monitor spending.

Convenience and trust may be especially important in driving BNPL adoption, since these factors are key to consumers when purchasing online. Consumers using a novel payment method still want to make purchases quickly and securely, without being bogged down in fine print. This may help explain why they are particularly interested in BNPL services integrated into digital wallets, which are already favored by many consumers for their convenience and security. PYMNTS research shows a quarter of consumers overall who have never used BNPL would be highly interested in using it in conjunction with digital wallets — and among bridge millennials, the share is 40 percent.

These findings only begin to touch the surface of the PYMNTS study, which also examines key purchase categories for BNPL, how these have shifted during the pandemic and how credit figures into consumers’ holiday online shopping plans. To learn more, download the report.