Microsoft Offers Customers PayPal’s BNPL Solution

Microsoft says its customers can now use PayPal’s buy now, pay later (BNPL) solution.

That announcement Wednesday (July 26) is part of the tech giant’s expanded partnership with PayPal, with the company’s Pay Later solution now available to people in the U.S., U.K., Australia, Germany, France, Spain and Italy.

Customers in the U.S. will also soon be able to pay with PayPal’s Venmo in the Microsoft Store. Venmo is currently available in the Microsoft Store on Xbox.

“With PayPal Pay Later, eligible consumers will now be able to pay for their purchases evenly over the course of weeks or months in fixed amounts, providing flexibility in how to pay and helping customers to better manage their budget,” the companies said in a news release.

And with Venmo, customers will get the option of purchasing subscriptions or split payments upon purchase.

The expanded partnership comes at a time of increased BNPL use among consumers, especially younger ones. For example, PayPal announced in its most recent earnings report that it had seen a 70% year-over-year surge in BNPL volumes.

“One of the primary reasons why BNPL has thrived among younger consumers is the financial flexibility and convenience it offers,” PYMNTS wrote last month.

“Traditional credit cards often come with high interest rates and strict repayment terms, making them less appealing to individuals seeking budget-friendly options. BNPL services, on the other hand, provide the flexibility to split purchases into smaller, interest-free installments, thereby enabling consumers to manage their finances more effectively.”

Recent research conducted by PYMNTS has offered more insight on the purchasing behavior of Gen Z and millennials when it comes to BNPL, with that study showing that one of the notable use cases for BNPL among these consumers is to buy groceries.

According to the PYMNTS and i2c collaboration “The Credit Economy: How Younger Consumers Make Credit Decisions,” grocery purchases accounted for more than 10% of BNPL users’ most recent transactions.

Within the surveyed group, 15% of millennials who use BNPL reported their most recent BNPL transaction was for groceries. Similarly, 14% of Generation X consumers also indicated their last BNPL transaction was for groceries.

But it’s not just grocery purchases. According to data from Square, Gen Z and millennials continue to play a key role in the growth of luxury brands, with Gen Z consumers being the fastest-growing group.