A major draw of BNPL services, particularly for younger cohorts, is financial flexibility. These solutions provide younger consumers, whose cash flow tends to be more limited, with greater flexibility in payments, especially for larger-ticket items. In March 2021 polling by The Ascent, 45.0% of US adults who were BNPL users said they used these services to make purchases that otherwise wouldn’t fit into their budget.
The top items respondents bought using these services include electronics, clothing and fashion items, furniture and appliances, and other digital leisure goods like movies, music, and games. Many of these are larger-ticket items, and some are purchased frequently by younger consumers. As BNPL solutions move more into services like travel, business services, and even healthcare, we expect adoption among older consumers will grow.
While Gen Z and millennials remain their target customers, BNPL services are increasingly turning their attention to Gen Xers and baby boomers. The top providers have long-standing partnerships with Forever 21, H&M, The RealReal, and other merchants with a youthful client base. And their strategy to reach older consumers may also center on partnerships: Last fall, Klarna announced a five-year tie-up with Macy’s. We expect to see more BNPL services partnering with stores that have Gen X or boomer clientele in the coming months.
Still, there remain some barriers to adoption among older consumers. While recent data has shown more consumers are understanding how these services work, The Ascent found that among US adults who hadn’t used BNPL services, nearly 20% said they don’t understand them at all. Since each platform functions in a slightly different way, older consumers may become overwhelmed and leery of adopting any of these services at all.
“People need a certain level of digital comfort to access these platforms to begin with, since it involves downloading an app and sometimes searching through the app for products,” said Oscar Orozco, eMarketer director of forecasting at Insider Intelligence.
The setup process alone can impede older consumers from giving the services a shot. “To counter some older users’ aversion to digital interactions, merchants are increasingly moving toward integrating BNPL services in-store, which should help expand the user base to those ages 40 and older,” Orozco said.
We forecast that in 2025, about 30% of BNPL service users will comprise of Gen X and baby boomers. Approximately the same share of users will be ages 45 and older. This year, 2.4% of internet users ages 65 and older will take up these financing services, and by the end of 2025, this figure will increase to 8.2%.
Even so, BNPL providers will likely find it hard to overcome the traditional payment habits of older generations. In The Ascent study, some non-BNPL users indicated a preference for using cash or bank-branded cards at the point-of-sale.
Given how entrenched cash and credit and debit cards are in the market, BNPL services seeking older users will have their work cut out for them.