The news: US shoppers spent $16.6 billion dollars this holiday season using buy now, pay later (BNPL) plans, per Adobe Analytics data from November 1 to December 31.

• BNPL volume increased 14% year over year (YoY).
• Total online holiday sales reached a record $222.1 billion this season, per Adobe, up 4.9% YoY.

What led to BNPL’s growth?

• Tightening credit standards. More than one-third (33.9%) of domestic banks tightened standards for credit card loans in Q4 2023, per the Federal Bank of St. Louis. This made it harder for riskier consumers to get approved for credit cards, pushing them to alternatives like BNPL.
• Older users. Despite the majority of BNPL users being millennials or Gen Zers, older generations are warming to the payment method. About 29% of Gen X used BNPL in 2023, but this share will jump to 40.5% by 2027, according to our forecasts. The share of baby boomers will jump from 13% in 2023 to 17.9% in 2027.
• More use cases. Consumers can use BNPL in more product and service categories. Affirm recently partnered with an eyewear retailer, for example, and Klarna partnered with a B2B car-rental company.
• Greater acceptance. BNPL debit cards and partnerships like Affirm’s with Walmart have made it easier to use BNPL in stores.

What’s next? All of these drivers will boost BNPL’s growth throughout 2024. US BNPL payment value is expected to grow 12.3% YoY in 2024 to reach $80.77 billion, according to our forecasts. Transaction value will skyrocket to $124.82 billion by 2027.