Invest Now, Win Later: How Buy Now, Pay Later Became a Merchant Growth Strategy

Buy now, pay later (BNPL) has emerged as a defining payment trend in recent years. What began as a niche checkout option has evolved into a meaningful driver of customer behavior and revenue creation.

Shoppers who use BNPL spend more, purchase more often and return at higher rates. It now influences how customers choose where to shop and how they engage over time.

However, the more common BNPL becomes at checkout, the less merchants are likely to gain from simply offering it. What increasingly appears to differentiate these offerings and drive their usage is how well the payment method is executed. If BNPL is insufficiently visible, accessible or easy for customers to use, merchants may risk losing not only conversion but also long-term loyalty.

Evidence is building that the merchants capturing BNPL’s full value are the ones treating it as a customer experience strategy rather than simply a payment option. Below, we examine how BNPL influences conversion and the factors that shape its effectiveness. Merchants that get these right are extending BNPL’s impact beyond individual transactions and into sustained growth.

Recognizing the Demand Signals

The availability of flexible payment options determines where and whether shoppers buy.

The data further shows that BNPL’s influence is especially pronounced among younger shoppers. When booking travel, 62% of millennials and 49% of Gen Z consumers say BNPL availability affects their choice of merchant. Across both everyday and discretionary spending categories, younger consumers are nearly twice as likely as the average shopper to factor BNPL into where they choose to buy.

Other PYMNTS Intelligence research finds that when BNPL is not available, 43% of consumers abandon the purchase entirely. Merchants risk losing not only conversion but also engagement itself when BNPL is absent.

BNPL also impacts how much consumers spend.

These demand signals clearly demonstrate that BNPL can no longer be viewed as an optional add-on but has earned its place as a core element of the checkout strategy. Recognizing BNPL as a required payment option is fundamental to capturing its full value.

Presentment Is a Key Lever

Offering BNPL merely at the checkout stage, however, may not be sufficient. Instead, evidence is growing that the most important moment for influencing customer behavior occurs earlier in the journey, when purchase intent is forming. Upstream presentment addresses this opportunity by making flexible payment options visible at the product page, cart and browsing stages rather than waiting until final checkout.

PayPal reports that merchants adopting upstream messaging and Pay Later button placements generated a 4.4% increase in overall sales, illustrating how visibility can directly influence purchasing behavior.²

By helping shoppers understand affordability earlier in the journey, merchants can influence purchase decisions before abandonment becomes a risk.

Reducing Friction Enhances Conversion

Speed remains BNPL’s strongest value proposition across demographics. PYMNTS Intelligence research shows that 43% of U.S. consumers cite fast approvals and reduced friction as the primary reason they use BNPL. The preference is even stronger among younger shoppers, with 55% of Gen Z consumers identifying speed and ease of approval as BNPL’s leading advantage.

Streamlined application and approval flows address this challenge by making BNPL feel like a natural extension of checkout rather than a separate process. When the experience is seamless, merchants can capture high-intent transactions without introducing new points of friction.

From Seamless Experience to Lasting Loyalty

When BNPL is delivered consistently and without friction, it becomes part of the customer’s preferred way to shop. This creates a loyalty loop in which repeat usage drives repeat purchases. PYMNTS Intelligence findings suggest that BNPL usage becomes highly habitual over time. Across spending categories, between 57% and 87% of consumers who regularly use BNPL say its availability strongly influences where they choose to shop. PayPal cites that 74% of global purchases made through its Pay Later option are from repeat buyers.¹ PYMNTS Intelligence further highlights that offering rewards for BNPL can compound this loyalty, with 38% of consumers saying rewards would increase their satisfaction with and, implicitly, their usage of BNPL.

Over time, these factors transform BNPL from a conversion tool into a retention strategy.

Cross-Border BNPL: The Global Demand Opportunity

Demand for flexible payment options increasingly extends beyond domestic commerce. According to a 2025 global BNPL industry report, BNPL transaction value is projected to rise 13.7% this year to more than $560 billion worldwide, reflecting continued consumer demand across a growing number of markets. Forecasts suggest that momentum will continue through the remainder of the decade as BNPL becomes a more established component of digital commerce.

For merchants with international ambitions, this trend represents a significant opportunity. Cross-border shoppers often face additional uncertainty around unfamiliar merchants, currency conversions and longer fulfillment timelines. In these environments, trusted payment methods can play an important role in building confidence at checkout. When paired with globally recognized payment brands, flexible payment options can help make purchases feel more familiar and manageable for consumers navigating cross-border transactions.

BNPL as a Unified Customer Strategy

The above findings strongly suggest that the full value of BNPL emerges when it is integrated across the customer journey rather than treated as a standalone payment method. Presentment, experience and loyalty are interconnected. When they are unified, BNPL can become a powerful growth engine.

PayPal argues that this combination of visibility, approval efficiency and post-purchase engagement is what drives stronger merchant outcomes. Because PayPal sits on a large network of data, it can pre-fill, pre-approve and underwrite a consumer within seconds, letting them apply and get approved for financing in just two clicks. That same data advantage means more than 90 million PayPal consumers worldwide are highly likely to be approved for Pay Later short-term installment offers, so they don’t need to sign up for anything new before using it.³ The result is an approval rate of 90% across markets.⁴

The business impact can be significant. One PayPal merchant that implemented upstream Pay Later messaging reported a 35% increase in PayPal sales and a sevenfold increase in order size. These results illustrate how execution—not merely availability—can influence customer behavior throughout the purchase journey.

From Payment Method to Growth System: Seizing the BNPL Opportunity

As BNPL becomes increasingly common across digital commerce, it presents a paradox: Access alone is not enough to differentiate merchants. What determines success now is how effectively BNPL is integrated into the customer experience, from initial product discovery through approval, purchase and repeat engagement. This conclusion reflects the broader theme of this series: The most powerful tools in a merchant’s growth strategy are only as effective as the experience built around them.

When delivered consistently and without interruption, BNPL becomes more than a payment method. It becomes part of how customers prefer to shop. That shift carries long-term implications. Merchants that invest in creating seamless, trusted BNPL experiences are not simply increasing conversion in the moment. They are building repeat purchasing behavior that compounds over time.

What we see across our network is that merchants who are consistently winning with BNPL have figured out that flexible payments can be a powerful growth driver. These merchants don’t wait for checkout to have that conversation—they’re showing up early, at the product page, to help drive purchase intent.”

<sup>1. Based on PayPal internal data analysis of merchants with Pay Later transactions from January to December 2024. Data inclusive of PayPal Pay Later transactions across seven markets (US, UK, AU, DE, ES, IT, FR).
2. Based on PayPal internal data analysis of merchants who added messaging/button between September 2020 and August 2025 and use PayPal for full-stack payment processing. Base: N = 209
3. Based on PayPal internal data, March 2025. Global Pay Later offers include Pay in 4 (US, AU), Pay in 3 (UK, IT, ES) and Paiement en 4x (FR). (DE is excluded.)
4. Based on PayPal internal data analysis of merchants with PayPal Pay Later transactions from January to May 2025. Data inclusive of all Pay Later transactions (including reuse) across seven markets (US, UK, AU, DE, FR, IT, ES).</sup>

Acknowledgment

The Checkout Paradox Tracker^® Series is produced in collaboration with PayPal, and PYMNTS Intelligence is grateful for the company’s support and insight. PYMNTS Intelligence retains full editorial control over the above findings, methodology and data analysis.