eCommerce: Payment Methods

Buy Now, Pay Later (BNPL) in the United States 2023:
Key Insights

• User Base: BNPL services in the U.S. are more popular with men, especially those aged 25-44, show no clear relationship with household income but slightly favor higher earners, are more common in larger households and in larger cities. 

• Top Providers: PayPal leads BNPL preferences in the U.S., favored by males and higher income groups, while Klarna and Afterpay are more popular among women and younger users; Klarna and Affirm stand out in smaller households and cities. 

• Usage Reasons: In the U.S., BNPL's flexibility attracts 60% of users, with affordability being a significant draw, especially among women; preferences for BNPL vary by age, income, and city size, highlighting its appeal for financial flexibility and lower interest rates.

The “Buy Now Pay Later (BNPL)” option has reshaped shopping habits, especially during the pandemic. It allows consumers to split purchases into installments, often interest-free. The approach is straightforward: pay a portion upfront, then pay the rest over time. 

BNPL's impact is evident in consumer spending. For instance, in Amazon Prime Days 2023, 6.5% of orders used BNPL, generating US$927 million in revenue, a 20% increase from the previous year. This trend is changing not just big sale days but also the holiday season, traditionally a stressful time due to gift expenses. 

As we covered before, younger generations favor BNPL for holiday shopping. This preference is less common among baby boomers. The trend of younger consumers opting for BNPL extends beyond seasonal shopping, indicating a shift in overall purchasing behaviors. 

To further explore this trend and understand how BNPL is shaping consumer spending, in collaboration with Statista, we asked consumers in the U.S. about their BNPL habits to assess the current state of this payment method. 

BNPL: More Popular with Men in the U.S.

Looking at the user base, we see that almost a quarter (23%) of online shoppers in the U.S. have used BNPL in the past 24 months. 

In relation to other age groups, users aged 25-44 are most likely to have used a BNPL service while older users can't imagine doing so.

When it comes to preferences among genders, male online shoppers are more likely to use a BNPL service in comparison to female shoppers. From a usage frequency perspective, male BNPL users tend to use the services more often, although the difference between genders here isn’t very pronounced.

BNPL is More Common in Bigger Cities

The findings reveal no clear correlation between household income and BNPL shopping activity. Having said that, people from households with more than US$75,000 of disposable income yearly are slightly more likely to use the service.

Looking at another aspect of households, we see that online shoppers living in larger households (3+ people) are more likely to use BNPL services. 

Concerning city size, another important metric in this context, the survey results confirm that the larger the city in which users live, the more likely they are to use a BNPL provider.

Now that we have a good understanding of the BNPL user base in the U.S., another question arises on this topic: Which one is the most popular BNPL provider in the United States?

PayPal is the Most Popular BNPL Provider in the U.S.

PayPal leads as the most popular choice among surveyed users, with more than half (55%) opting for it. The company’s strong market presence, as well as the high level of trust and familiarity among consumers are factors contributing to this.

Afterpay is close behind with 34% usage, while Klarna, the Swedish fintech company, follows with a significant 32% usage rate. Coming in fourth, Affirm holds a substantial share with a 29% usage rate.

Apple Pay Later, a relatively newer entrant, has managed to capture 17% of the user base, which is notable and could point to a growing preference for integrated payment solutions within the Apple ecosystem. Zip/Quadpay, though less popular at 11%, still maintains a presence. Finally, Sezzle rounds out the list with 8% usage.

Klarna, Afterpay and Affirm More Popular with Female Users

In terms of gender, PayPal, the most popular BNPL provider in the country, shows a striking preference among male users, with 67% opting for it, compared to 42% of female users. While Klarna is more likely to be preferred by female users (41%) than males (25%), Afterpay shows a similar trend, where this split is 42% to 26%.

Apple Pay Later exhibits a pronounced gender divide, where we see a quarter of male BNPL users opt for Apple Pay Later, yet only 9% of female users do so. Affirm has a more balanced gender distribution among its users, with 24% of male users and 35% of female users.

Though less popular overall, Zip/Quadpay shows a near-equal distribution (12% male, 10% female) while Sezzle stands out as the most gender-neutral option, with both male and female users at 8%.

Klarna and Apple Pay Later: Younger User Base

Among all age groups, PayPal has the highest usage rate. While it is especially strong with the 25-44 age group, users aged 75 and above have also a high usage rate (63%). 

Afterpay, the second most popular provider in our survey, is particularly strong among the 20-24 age group. Same can be said for Klarna, whose strongest age group extends to 20-34.

Looking at other providers, we see that Apple Pay Later is more popular with users aged up to 44. In contrast, at 37%, the 55-64 age group is the strongest for Affirm. While Zip/Quadpay is more popular among younger users, Sezzle mainly attracts users aged 25 to 54.

PayPal and Apple Pay Later Usage Grows with Income Levels

In the case of PayPal and Apple Pay Later, we see a positive correlation between usage and user household income. However, other providers differ in this sense. 

Klarna's strongest user base (41%), for instance, is users with US$40,000 to US$50,000 of annual household income. This also applies to Afterpay (39%), Affirm (35%) and Zip/Quadpay (14%). 

While the same cohort is the second strongest (11%) for Sezzle, it is the users with more than US$40,000 of annual household income that are most likely to use the provider.

Klarna and Affirm: More Popular in Smaller Households

While PayPal is the preferred BNPL option through all household sizes, the strongest group for each provider differs.

With PayPal, for instance, it is the households with 4 people that are most likely (65%) to use the provider, while the same can be said for Apple Pay Later (30%), Afterpay (38%), Zip/Quadpay (15%) and Sezzle (10%). 

Klarna diverges from others, where 1 person households are the most likely (34%) to use the provider. We see the same household group on top in Affirm's case with 32%. 

Affirm is More Popular Smaller Cities

Just as they do in respect to household size, Klarna and Affirm also differ from other providers in the context of city size. Survey findings show that PayPal, Apple Pay Later, Afterpay, Zip/Quadpay and Sezzle are more likely to be used in bigger cities.

Relative to other city sizes, Klarna is the most popular in cities with 500,000 to 1,000,000 inhabitants. Affirm, on the other hand, is more likely to be preferred in smaller cities.

Flexibility is the Top Reason to
Use BNPL in the U.S. 

Having covered who uses BNPL through which provider, it is now time to have a look at why users choose BNPL services. 

Survey findings reveal that 60% of BNPL shoppers in the U.S. use the service because of more flexibility through installment purchases. In addition, 38% said that they could not have afforded the product otherwise.

While lower interest rates compared to credit cards is another significant reason for users to opt for BNPL (37%), a fifth (20%) of users stated that they used BNPL services as they were curious and wanted to try it out.

More Women Than Men Use BNPL for Affordability 

There are some disparities among users in terms of gender. Having said that, the top reason for both female and male users to favor BNPL services is the flexibility they bring. While 62% of female users stated this reason, male users’ share is lower at 58%. 

Almost half (48%) of female users said that they used BNPL as they couldn’t have afforded the product otherwise. The same reason was agreed upon by just below one third (29%) of male users. 

Lower interest rates than credit cards is the second biggest reason (43%) for male users to make use of BNPL services, while 31% of female users expressed this reason. In addition to this, about a fifth of both male (19%) and female (21%) users said that they used BNPL services simply because they were curious.

Young and Senior Users Value Affordability and Curiosity 

Looking at BNPL usage reasons through the lens of age, we see that, “lower interest rates than credit cards” progressively becomes more significant through age groups, reaching its peak with the 35-44 age group at 29%, then decreasing in relevance towards older age groups. 

The same pattern can also be seen in the case of “more flexibility”, with 40% of the 35-44 age group stating it as a BNPL usage reason. 

In relation to other age groups, the reasons “could not have afforded the product otherwise” and “was curious / wanted to try it out” are the most important for the 18-20 and 65-74 age groups.

Higher Earners Value Low Interest Rates 

Household income is another important metric in this context, as it speaks directly to the purchasing power of BNPL users.

In relation to other income levels, users with more than US$50,000 annual household income have the highest response rate for the reason “lower interest rates than credit cards”. While we see a positive correlation between income level and “more flexibility” as a BNPL usage reason, “could not have afforded the product otherwise” is naturally more relevant for lower income groups. 

Despite having a low but consistent response rate among different income levels, the reason “was curious / wanted to try it out” resonates the most with users within the US$30,000-50,000 range, in relation to other income levels.

Larger Households Prioritize Flexibility and Savings in BNPL 

When we explore BNPL usage based on household size, it’s clear that preferences shift slightly. 

For individuals living alone, the main draw is "more flexibility" in payments, cited by 36%. This reason holds steady or slightly increases as household size grows, peaking at 40% for four-person households. Interestingly, the appeal of "lower interest rates than credit cards" grows with household size, starting at 22% for one-person households and reaching 30% for four-person households, indicating that larger households might prioritize cost savings more.

The reason "could not have afforded the product otherwise" decreases in importance as household size increases, suggesting that larger households may have more financial flexibility. Curiosity about BNPL services shows a slight decrease from 13% in one-person households to 10% in households of five or more, possibly due to varying financial priorities or awareness levels among different household sizes.

Learn More About ECDB

Larger Cities Favor Flexibility and Lower Rates 

Analyzing BNPL usage reasons based on city size shows how urban environment impacts consumer preferences. 

In smaller cities with less than 5,000 inhabitants, "more flexibility" in payments is a leading reason for choosing BNPL, noted by 34%. This preference for flexibility increases as city size grows, reaching up to 41% in cities with populations over 500,000. The interest in "lower interest rates than credit cards" also rises with city size, starting at 25% in the smallest cities and peaking at 30% in the largest urban areas (5+ million inhabitants), suggesting that the financial benefits of BNPL are more appealing in larger cities.

Conversely, the reason "could not have afforded the product otherwise" decreases significantly with city size, from 28% in the smallest cities to 16% in the largest, indicating that consumers in larger cities might have better financial stability or access to funds. Curiosity about BNPL services remains relatively constant across all city sizes, hovering around 10% to 13%, showing a uniform interest in exploring new payment methods regardless of urban setting.