One Year In: What The Pay Later Data Actually Reveals

When the Pay Later Ecosystem series launched in April 2025, buy now, pay later was dominating the consumer lending narrative. The payment method had already taken a big chunk of the market, and many new providers were entering the space with products targeting younger, digital-first consumers. To many, BNPL’s further rise looked certain.

But that isn’t what happened. Traditional card issuers started taking the threat more seriously. They leaned into installment features already built into their cards and capitalized on something BNPL couldn’t replicate: decades of incumbency and existing customer relationships. PYMNTS Intelligence research shows that roughly twice as many consumers used credit card installment plans as BNPL in the last year, and crucially, that gap didn’t narrow over time. That means BNPL held its ground against the industry giants—but it also hit a ceiling.

Even in the segments it was built to win, BNPL is running into that ceiling. Younger consumers, who were expected to lead adoption, have consistently used credit card installment plans at roughly two times the BNPL rate. This includes 47% of Gen Z who used card installment plans versus 23% for BNPL in the latest survey. Meanwhile, consumers earning less than $50,000 per year use BNPL far less frequently than those with high incomes, despite the product’s original focus on expanding access. Together, these trends suggest that existing financial relationships and familiarity with card-based products shape the adoption of the payment method more than a financial need in a tightening economy.

These are just some of the findings detailed in “One Year In: What The Pay Later Data Actually Reveals,” a PYMNTS Intelligence exclusive report. This edition of the Pay Later Ecosystem Report is based on eight waves of surveys conducted from April 2025 to March 2026, each with approximately 2,500 U.S. consumer respondents. It examines consumer use of two key Pay Later tools—BNPL and credit card installment plans—and how their underlying preferences are shifting in early 2026.

• Key Findings
• Closing the Pay Later Gap
• Younger Consumers Play Hard to Get
• The High-Income Surprise
• The Recurring Expense Mismatch
• Conclusion
• Read More
• Methodology

Key Findings

BNPL woke up the competition but couldn’t match the built-in advantages of credit cards.

Card installment plans led BNPL roughly 2-to-1 across all eight surveys over the last year.

Younger consumers choose credit card installment plans over BNPL.

Gen Z, millennials and bridge millennials used credit card installment plans at roughly 1.8 to 2.5 times the BNPL rate in every wave.

BNPL aims at younger, credit-constrained consumers, but high earners use it most.

Consumers earning $150K or more used BNPL at roughly twice the rate of those earning less than $50K.

BNPL was designed for planned purchases. When consumers use it only for essentials, three in four pay late.

This is nearly double the late payment rate for those who use it strictly for occasional or one-time purchases.

Closing the Pay Later Gap

BNPL woke up the competition but couldn’t match the built-in advantages of credit card installment plans.

BNPL providers had big ambitions. They aimed to take the lead in installment lending, particularly among younger consumers. That disruption has yet to materialize, although BNPL has carved out a slice of the market. Between April 2025 and March 2026, we estimate that more than twice as many consumers paid with credit card installment plans as with BNPL. Crucially, that ratio held steady throughout the year, meaning BNPL didn’t gain ground in the last 12 months.

In large part, this is a story about incumbency. Card issuers didn’t need to introduce new products to compete with BNPL. Instead, they began to more aggressively promote installment plan capabilities already embedded in existing credit offerings. For existing cardholders, that means minimal friction: no need for a new account or even a credit application. BNPL providers, by contrast, often require each of those steps. This structural advantage for card issuers has so far proven unbeatable.

Younger Consumers Play Hard to Get

Younger consumers choose credit card installment plans over BNPL.

Gen Z, millennials and bridge millennials used credit card installment plans at roughly 1.8 to 2.5 times the BNPL rate in every wave.

BNPL’s growth narrative has centered on younger consumers. The assumption was that Gen Z and millennials—who are less attached to traditional credit cards and more comfortable with app-based financial tools—would make BNPL their default installment option. Yet that has not played out.

The latest survey shows that nearly half of Gen Z consumers (47%) used credit card installment plans in the last 90 days, versus 23% for BNPL. The numbers for millennials and bridge millennials—the crossover of older millennials and younger Gen X—are nearly identical. Looking back over the last year, consumers in each age group have used card installment plans at about twice the rate of BNPL.

If this sounds like the overall card installment plan versus BNPL trend discussed above, you’re paying attention. And that means BNPL has struggled to break through with its most important targets.

The High-income Surprise

BNPL aims at credit-constrained consumers, but high earners use it most.

BNPL launched with a focus on financial inclusion. It would extend credit access to many that the traditional card system had left out, including younger and lower-income consumers without established credit histories. The product’s design reflected that logic by offering approval at checkout with a simple application and no credit card required.

But a full year of data reveals that BNPL hasn’t exactly taken off with the lower-income segment. Our latest survey shows that just 10% of consumers with annual household incomes of less than $50,000 used BNPL in the past 90 days. Each wave before has returned similar results, with expected month-to-month fluctuation. Notably, BNPL use doesn’t climb that much in the $50,000 to $100,000 bracket, coming in at 12% in March.

High-income consumers are a different story entirely. In our latest wave, BNPL use jumps to 18% for households in the $100,000 to $150,000 range, and even higher to 20% for those annually earning more than $150,000. Across previous surveys, the high-versus-low income gap was similarly large. These findings indicate that BNPL often functions less as an access tool and more as a spending optimization strategy.

The Recurring Expense Mismatch

BNPL was designed for planned purchases. When consumers use it only for essentials, three in four pay late.

BNPL was designed for discrete, one-time purchases with a clear repayment schedule. But many consumers are using it for basics such as groceries and recurring expenses, including utilities and subscriptions, meaning costs with no natural endpoint. When a fixed installment plan is layered onto a recurring obligation, payment timing quickly breaks down.

The data reflects that mismatch. In our latest survey, 76% of consumers who used BNPL for essentials in the last 90 days report paying late at least once during that period. For those using BNPL strictly for one-time or discretionary purchases, the late payment rate drops to 43%. The gap has been roughly the same across all eight survey waves, at approximately 30 percentage points, highlighting a persistent structural difference. BNPL works best for planned and discretionary purchases, and becomes much harder to manage when used to cover ongoing expenses.

Conclusion

A year of data shows that BNPL has held its ground against credit card installment plans but has been unable to expand its market share. That remains true even among younger consumers and lower-income groups, segments where BNPL was expected to gain the most traction. Ultimately, the incumbency of card issuers, grounded in their access to existing customer relationships, gives credit card installment products a massive advantage that BNPL providers will be unable to challenge anytime soon.

Read More

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Methodology

“One Year In: What the Pay Later Data Actually Reveals” is the latest installment of the Pay Later Ecosystem series, a PYMNTS Intelligence exclusive series. The report is based on a survey of approximately 2,500 U.S. adult consumers, launched in April 2025 and conducted monthly from September 2025 through March 2026.

This report examines consumer use of BNPL and credit card installment plans across generational cohorts, household income and purchase types. The sample was balanced to match the U.S. adult population by age, gender, education and income.

Note: The April 2025 survey wave used wording that did not distinguish general-purpose card installments from store card installments. This may understate the adoption of credit card installment plans in that wave relative to subsequent waves. All other waves used consistent, differentiated question wording.