This article is part of a larger series on Payments.
Short-term financing, often referred to as buy now, pay later or BNPL, lets consumers pay for purchases over time through a series of installments. It is also one of the most prominent trends in the retail market. Where financing used to be popular only for large purchases like furniture and cars, consumers now use it for everyday purchases—thanks to BNPL services like Klarna, PayPal, and Afterpay.
This article looks at 24 BNPL statistics and trends that will help your business understand how consumers use the service and how you can capitalize on its popularity.
Consumer-focused BNPL Statistics
To best understand and react to the BNPL landscape, you first need to understand consumer behavior. Let’s look at how shoppers are using BNPL.
1. There were 360 million BNPL users worldwide in 2022
According to Juniper Research, the 360 million BNPL users globally in 2022 is expected to grow to more than 900 million by 2027. Juniper attributes this increase to an anticipated economic downturn and the proliferation of virtual credit cards, among other reasons.
2. 50% of consumers have used BNPL services
BNPL is a fast-growing payment option. With half the US population having used BNPL services, 2022 represented a significant increase over 2020, when only 37.7% of consumers had utilized BNPL services.
3. BNPL’s user base grew 85% in 15 months in 2020 and 2021
We can see another example of BNPL’s rapid growth from a PYMNTS study. It found that amid the COVID-19 pandemic in a 15-month period between 2020 and 2021, the user base for BNPL services increased by 85%.
4. Afterpay saw a 34% increase in signup traffic between 2020-2021
In 2020, Afterpay reported 1.7 million customer signups on its site. Only one year later, it is up 34% to 2.3 million.
Did you know?
Afterpay is one of our recommended BNPL apps, particularly for younger shoppers with limited budgets or learning to manage money.
5. Almost 75% of BNPL users are Gen-Z or millennial
Boomers and later generations have some hesitation about BNPL services and are more prone to using traditional buying methods. This, paired with millennial and Gen-Z enthusiasm surrounding BNPL, has skewed usage toward younger people. In fact, eMarketer found that 75% of BNPL users are from those younger generations.
6. Two-thirds of BNPL users think the service could replace credit cards
A study from The Ascent found that 67% of BNPL users think that BNPL services could replace traditional credit cards in the coming years. This is mainly due to the services’ growing ubiquity and ease of use. It is important to note, however, that while two-thirds of users foresee this shift from credit cards, only about a third want to see it happen.
7. Making purchases that don’t fit their budget is the top reason consumers use BNPL services
Forty-five percent of BNPL users say that they use the service to make purchases that won’t otherwise be feasible. Other reasons consumers use BNPL include:
- Avoid credit card interest (37%)
- Borrow without a credit check (21%)
- Guard personal data (20%)
- Don’t have a credit card (14%)
8. The number of missed payments and late fees is on the rise
According to Buy Now, Pay Later: Market Trends and Consumer Impacts, a study from the Consumer Financial Protection Bureau, among people who borrowed from Affirm, Afterpay, Klarna, PayPal, and Zip, 7.9% were charged at least one late fee in 2020. The following year that number was up more than 33%, with 10.5% of borrowers incurring late fees in 2021.
9. BNPL usage on everyday/necessities purchases rose 434% between 2020 and 2021
BNPL usage for “everyday” or “necessity” purchases (gas, groceries, utilities, etc.) rose 434% between 2020 and 2021 according to a study from the Consumer Financial Protection Bureau. In dollars, that’s a jump from $42.9 million to $229.2 million in just one year.
10. Nearly 60% of BNPL users say they have used the service to buy something unnecessary
While many people use BNPL services to purchase expensive, necessary items, BNPL usage can also be frivolous. In fact, 59% of BNPL users have admitted to using the service to purchase an unnecessary item outside their budget.
11. Buying electronics is the most common use of BNPL
Forty-seven percent of BNPL users have used the financing service to purchase electronics, making it the top-performing category. Other popular BNPL categories include:
- Clothing and fashion (43%)
- Furniture and appliances (31%)
- Personal care items and cosmetics (28%)
- Household essentials (27%)
- Groceries (24%)
- Books, movies, music, and games (22%)
- Fitness equipment (15%)
12. Over a third of shoppers use BNPL at least once a month
Along with overall use, the frequency with which consumers use BNPL services is also increasing. In fact, The Ascent study found that 38% of customers use BNPL services once a month or more. Not only that, nearly 9% use BNPL more than once a week.
13. The average amount customers spent on their last BNPL purchase was nearly $700
A study from C+R Research found the average value of BNPL users’ most recent purchase to be $689; their average outstanding amount owed is $883.
14. Nearly half of BNPL users anticipate making a late payment in the next 12 months
While the risks associated with late payments typically fall on customers, it is important to note that 46% of BNPL users anticipate making a late payment for purchases. Late payments lead to fees and damaged credit which can, in turn, cause customers to become angry and distrustful and can even diminish their loyalty to your brand.
Want to start a loyalty program? Check out our breakdown of the top customer loyalty programs on the market.
15. Loan approval rates increased by 4% between 2020 and 2021
From 2020 to 2021, approval rates rose 4%, from 69% to 73%, among loans from Affirm, Afterpay, Klarna, PayPal, and Zip (formerly QuadPay). Simultaneously, loan values increased from $121 in 2020 to $135 in 2021.
16. 33% of BNPL users have made a late payment
As mentioned above, nearly half of BNPL users think they’ll make a late payment. One-third actually have made a late payment since opening their payment plan.
Retailer-focused BNPL Statistics
In addition to understanding how customers use BNPL services, it is important to know how the retail industry is reacting and adapting.
17. Fashion and apparel is the fastest-growing BNPL shopping category
SimilarWeb reported that apparel purchases made up 31% of all BNPL buys. Furthermore, it saw a 24% increase from 2020 to 2021 in fashion and apparel BNPL traffic share. This is part of a larger trend in SimilarWeb’s report, which found that BNPL is being applied to smaller, more frivolous purchases more often.
18. PayPal is the most common BNPL service provider
There are many popular BNPL services, such as Affirm, Afterpay, and Klarna. The one you will find consumers using most often, however, is PayPal. In fact, 57% of BNPL shoppers use it. Runners-up include:
- Afterpay (29%)
- Affirm (28%)
- Klarna (23%)
- ZipPay (19%)
19. More than a quarter of small and midsize businesses have adopted BNPL services
While large companies certainly took the lead with BNPL services initially, smaller businesses aren’t too far behind. As of 2021, 28.1% of small and midsize businesses offer BNPL services to their customers.
Want to add BNPL services to your business? Check out our guide on how to offer customer financing.
20. Amazon partners with Affirm
In big news for BNPL, Amazon partnered with Affirm in 2021 and rolled out customer financing options for purchases of $50 or more—and Affirm offers 0% APR on many purchases.
21. Square acquired Afterpay for $29 billion
In addition to Amazon and Affirm, another major partnership in the world of BNPL was the purchase of Afterpay by Square. Square paid a hefty $29 billion for the product and will incorporate the service into the Square universe in the coming months. Current Square users will get Afterpay services added to their accounts automatically, and all future Square users will have access to Afterpay services with all Square POS plans.
Learn more about Square with our guide to why small businesses love it.
22. Ecommerce retailers that offer BNPL services see a 2.1% average higher conversion rate
As BNPL services are becoming more popular and consumers more inclined to use them, financing options have become a selling point for many. In fact, SimilarWeb found that retailers offering BNPL options see a 2.1% higher conversion rate than those that don’t.
23. The BNPL market value hit $120 billion globally in 2021 and will continue to rise
The BNPL market experienced a compound annual growth rate (CAGR) of more than 85% between 2019 and 2021, jumping to $141.8 billion in 2021. This trend is expected to continue in the coming years, with an estimated $596 billion value by 2026.
24. From 2019 to 2021, the number of US BNPL loans grew by 970% among Affirm, Afterpay, Klarna, PayPal, and Zip
According to the Consumer Financial Protection Bureau, from 2019 to 2021, the number of BNPL loans in the US rose 970% among five of the top BNPL providers. This 970% was equal to a jump from 16.8 million to 180 million loans in the US alone. In dollars, the jump was even greater, with a 1092% increase from $2 billion to $24.2 billion.
As we have seen throughout this article, the uptick of BNPL services is one of the biggest trends in the modern retail market. To stay competitive, examine the data above and consider incorporating a BNPL service into your business. Learn more about offering BNPL and customer financing to your shoppers.