Half of Holiday Shoppers Are More Likely to Complete Their Purchase With Buy Now, Pay Later Services

Half of holiday shoppers are more likely to complete their purchase if they can use buy now, pay later, according to a recent survey by PayPal (NASDA: PYPL).

"PayPal data shows offering BNPL leads to a 91% higher average order value for enterprises and 62% higher for small businesses, meaning it isn’t just a nice-to-have, it’s a proven advantage to win,” PayPal General Manager of Small Business and Financial Services Michelle Gill said in a Oct. 22 statement announcing the survey results.

PayPal is the most commonly used BNPL service, according to a BankRate survey earlier this year.

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Gen Z and millennial shoppers are most likely to use BNPL for holiday shopping, the PayPal survey said, as one-in-four members of both generations regularly use the service. Respondents cited affordability and budget control as their primary reasons for using BNPL.

The risks of using BNPL

Buy now, pay later has become a part of everyday shopping for many U.S. consumers. Americans are expected to spend $116.7 billion via the services by the end of 2025, according to market newsletter The Kobeissi Letter earlier this year.

The Federal Reserve in May reported that 82% of people use BNPL for convenience.

It's also become a necessity for some Americans. The Fed says 72% of BNPL users making less than $50,000 use it because it's the only way they can afford certain purchases.

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Nearly a quarter of BNPL users are financing their groceries, according to a Lending Tree survey earlier this year, up from 14% the prior year.

While this is a win for the providers, financial experts and officials have said it can be risky for shoppers, especially those with existing budget problems.

Nearly a quarter of all users had at least one missed payment from May 2024 to this past May, according to The Fed, up from 18% the year before. Lower-income shoppers had a higher rate of missed payments; 40% of BNPL users making less than $25,000 had a late payment, an increase of 9 percentage points year over year.

Only 13% of users making $100,000 or more missed a payment.

Some BNPL services don't charge late fees, but others fine users as much as $15 per late payment.

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