New Study reveals a strong preference for pay-later options during the holiday season

Last updated December 2024

Maximizing Holiday Revenue: Why Early Pay-Later Visibility Matters

As the holiday shopping season ramped up, new research from Splitit and PYMNTS revealed surprising trends in how different consumer demographics planned to use pay-later options. The study, Maximizing Holiday Revenue: The Strategic Value of Early Pay-Later Visibility, surveyed 5,000 consumers and found that while younger generations were known for being budget-conscious, baby boomers were actually the most likely to leverage pay-later options for holiday purchases.

Baby Boomers Lead the Pay-Later Trend

A striking 73% of baby boomers planned to use pay-later solutions to spread out holiday spending, outpacing Gen Xers (68%) and millennials (65%). Interestingly, despite their reputation for prioritizing budgeting, Gen Zers were the least likely generation to use pay-later options this past holiday season, with only 60% intending to do so.

Gen Z’s Unique Pay-Later Habits

Although Gen Zers are cautious with spending, 44% of them planned to use pay-later options to justify splurge purchases. Their top spending categories included personal items (42%), entertainment (35%), and dining out (25%).

Higher-Income Shoppers Drive Pay-Later Usage

The study also challenges the notion that consumer finance options primarily serve lower-income consumers. Among those earning over $100,000 per year, 60% have recently used a pay-later solution, compared to just 48% of consumers earning under $50,000.

Additional insights include:

Credit card installments are gaining traction. Nearly half (46%) of Gen Zers increased their use of credit card installment plans this year, surpassing the 44% who increased their use of traditional BNPL (Buy Now, Pay Later) solutions.
Early visibility boosts conversion. Some 68% of respondents, including 65% of Gen Zers, decide to use card-linked installments before they reach checkout. Almost half of Gen Z shoppers prefer being offered pay-later plans earlier in the shopping process.
Pay-later options alleviate spending guilt. More than half of millennial parents say using pay-later plans helps reduce guilt associated with splurge purchases. Among all parents surveyed, 67% planned to leverage these options to spread out holiday gift spending.

Why Banks and Merchants Must Prioritize Pay-Later Awareness

For banks, issuers, and merchants, the timing of pay-later promotions is critical. The study highlights key insights for financial institutions looking to capture high-value customers:

Bank consumers prefer during-purchase installments: Nearly 90% of high-income shoppers and young adults without kids prefer seeing pay-later options during the shopping process rather than post-purchase.
Early awareness drives adoption: With only 18% of respondents choosing card-linked installments post-purchase, the research underscores the importance of presenting these options before checkout.
Bank-backed installments are favored: Credit card-linked installment plans (39%) ranked higher in preference than BNPL (38%) and store cards (31%), reinforcing consumer trust in established financial institutions.
Spending increases with card-linked installments: Respondents indicated they would spend 46% more when given the option to use credit card installments at checkout, demonstrating significant potential for higher-ticket sales.

The Future of Pay-Later in Holiday Shopping

As the report illustrates, integrating pay-later solutions into the shopping experience—especially early in the journey—can help merchants drive sales and maximize revenue. Consumers, particularly high-income and younger shoppers, respond positively to installment options when presented at the right time.

For retailers and financial institutions, now is the time to prioritize visibility and strategic placement of consumer financing options. By making these options visible earlier in the customer journey and not just as a checkout solution, businesses can enhance consumer confidence, drive higher spending (AOV), and increase holiday revenue.

About the Report: Maximizing Holiday Revenue: The Strategic Value of Early Pay-Later Visibility study is based on a survey of 5,000 consumers conducted by Splitit and PYMNTS, providing data-driven insights into how different demographics engage with pay-later solutions during the peak shopping season.

Get the full report

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