A recent study by Splitit, the only white-label card-based installment platform using consumer credit, in partnership with Pymnts looked at how consumers use the buy now, pay later payment plans and how the model has changed consumer behavior over the last six months. The report titled “Redefining Retail: Consumer Finance Trends Driving the Evolution of Installment Plans,” surveyed more than 2,600 people — with 51 percent of respondents identifying as female, 34 percent of people holding a college degree, the average age of 48 and 39 percent annual income exceeding $100,000.
Sixty-five percent of Gen Z and Millennial consumers have all used an installment plan in the past year. However, nearly 63 percent of Gen Z shoppers are more loyal to their credit cards than retailers. And half of all consumers said they would switch to another retailer merchant if they offered card-linked installment plans at their checkout.
However, 33 percent of all consumers surveyed said they were unaware that BNPL programs are a new loan. The report’s authors found that this cohort of shoppers would switch their retailers at checkout to use BNPL installments through their existing credit cards.
Forty percent of survey respondents said they would opt for credit card-linked installment options, with 33 percent choosing third-party BNPL services and 30 percent opting for merchant or store cards.
Installment plans are an appealing option to consumers who are looking to have a more active role when managing their consumer spending habits. Although installment plans are declined for discretionary purchases like dining out, their usage for major purchases such as home furnishings and large appliances has been a major player in retail spending trends.
Now, card-linked installment plans using existing bank credit are becoming a favored option for big purchases — with 33 percent of consumers opting for this method in comparison to 21 percent of consumers using the traditional pay-in-four installment options.
These findings are a stark difference from how legacy BNPL programs are seen as smarter ways to pay for products and services over bank-issued credit cards.
“Younger consumers are more loyal to their form of payment than to the brand or retailer where they are shopping,” said Nandan Sheth, chief executive officer of Splitit. “Gen Z shoppers are the highest share of consumers that use pay later plans and are the least concerned with the impact traditional BNPL programs can have on their credit scores. However, even though many of the legacy pay later players remind their consumers to never miss a payment, the fact remains that more than one-third of all shoppers have no idea that they are initiating a new loan.”
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