New PYMNTS Data Shows Affluent Shoppers Use Pay Later for Gucci and Groceries

Covet that designer dress at Bergdorf Goodman, but can’t pay for it because you’ve maxed out your credit cards? Increasingly, there’s another way.

A recent deep dive by PYMNTS Intelligence into what’s known as the Pay Later landscape reveals a surprising trend sweeping America’s consumer landscape: A growing number of higher-income shoppers are embracing the ‘pay later’ economy mostly for splurges but also for essentials.

Since emerging more than two decades ago as an alternative to traditional credit cards, buy now, pay later (BNPL) platforms (more accurately referred to as pay later) cultivated an image of cash-strapped consumers with poor credit histories and limited financing options. But in fact, PYMNTS data shows more than six in 10, or 61.4%, of Americans making more than $100,000 a year use BNPL to splurge on everything from designer clothing to porcelain veneers to overseas travel.

While it’s not surprising that having more disposable income correlates with more spending on non-essentials, 13.5% of higher earners are using the payment method out of necessity. Maybe they have maxed out their credit cards and have an expensive auto repair. Maybe the card they want to use comes with perks and rewards that they want to tap into for another purchase.

What’s clear is that the alternative credit option has become mainstream for the majority of higher earners. Last December, Klarna, a major BNPL provider, announced that it had entered into partnerships with luxury retailers Neiman Marcus and Bergdorf Goodman.

Pay-later loans totaled $175 billion last year, according to “Pay Later Revolution: Redefining the Credit Economy,” and are part of the hyper-competitive Pay Later ecosystem, which includes credit cards — the foundation of consumer credit — and personal, auto, home equity and earned wage access loans.

The comprehensive PYMNTS Intelligence report, which includes data from a forthcoming study for Splitit, a pay-later provider, shows that near the end of 2024, more than one in three American consumers, or 38%, used the payment method, up from 24% in the prior year.

Need-driven shoppers remain a significant part of the pay-later total user base, representing 51.2% of adult American consumers. By contrast, affluent consumers who aren’t cash-strapped are primarily using the payment method for a key reason: convenience. Pay later allows them to manage their monthly cash flows and allocate spending on their credit cards. The takeaway: Pay later has evolved into a sophisticated financial tool for consumers who have access to traditional credit but are strategically choosing alternative payment methods.

Pay later’s appeal for high-income consumers lies in several key factors:

Cash Flow Management: Affluent consumers, despite their financial stability, like to spread out payments for both large and smaller purchases without immediately impacting their other credit lines or cash on hand. Doing so allows them to better manage their cash reserves and credit card usage and potentially allocate funds to other purchases, investments or other financial goals.

Maximizing Rewards and Avoiding Credit Line Utilization: Many high-income individuals hold credit cards with lucrative rewards programs and pay off their balances in full each month (that rate is 61% for high-income shoppers who use BNPL for convenience). By using BNPL, they can enjoy the benefit of immediate gratification without increasing their credit utilization ratio or potentially incurring interest charges on their credit cards.

Promotional Financing: Savvy consumers, regardless of their income, are drawn to the opportunity to finance purchases without incurring additional costs, especially for higher-value items or during promotional periods offered by merchants.

The evolving landscape of the Pay Later ecosystem reflects this broadening appeal. While pure-play BNPL providers including Affirm, Klarna and Afterpay initially focused on smaller-dollar transactions for a wider demographic, they are now expanding their offerings to include longer-term financing options for larger purchases, catering to a more diverse customer base.

Meanwhile, traditional banks are recognizing the consumer appeal of predictable monthly installments and are integrating installment options into their existing credit card products, such as American Express’s “Plan It,” Citibank’s “Flex Pay,” and Chase’s “My Chase Plan.” With bank-branded BNPL products now the most preferred Pay Later option among merchants, affluent consumers with higher credit limits can increasingly fold “Pay in 3” and “Pay in 4” BNPL installment plans into their pocketbooks.

Here are three key data points from the report that challenge the conventional perception of BNPL users:

More than 60% of BNPL users who utilize the alternative payment method for convenience have an annual income exceeding $100,000.

BNPL usage among all American consumers reached 38% toward the end of 2024, nearly matching the usage of general-purpose credit cards.

A significant portion (40%) of online retailers now have direct integrations with BNPL providers, indicating its mainstream adoption across the retail landscape.

These figures highlight how the common perception of BNPL consumers as solely “broke borrowers” is a rapidly becoming outdated. The emergence of higher-income users of the payment method underscores how even wealthier shoppers see value in flexible payment options for a wide range of goods and services, from everyday essentials to luxury indulgences.