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The Rise of Buy Now Pay Later: Gen Z’s Views Benefits and Risks

Buy now, pay later (BNPL) is an increasingly popular alternative payment method that allows consumers to purchase products and pay for them in installments, without interest or fees in most cases. This payment option has become more popular in recent years, especially among younger generations, but also older ones.

In this article, we will explore Gen Z’s perceptions of BNPL, why the use of BNPL has increased, and its benefits. Generation Z’s Perceptions of BNPL

Favorable Views of BNPL Among Gen Z Consumers

Generation Z, also known as Zoomers, are individuals aged 9 to 24 years old. According to a survey by Finder, 60% of Gen Z respondents used BNPL services at least once.

They view BNPL as a convenient and flexible way to pay for products, especially for expensive ones. They appreciate that it provides a budget-friendly option that offers transparency over the total amount owed to avoid hidden charges, and no interest is incurred for repayments made within the agreed timeframe.

Negative Attitudes Towards BNPL among Older Generations

Although Gen Z has embraced BNPL, older generations such as boomers and Gen X have a different perspective. They view BNPL as a risky payment option that could eventually lead to financial ruin.

They have concerns that it could be a debt trap, causing users to have more debt obligations than their income can sustain.

Similar BNPL Use Across Generations

Despite the differences in perception, both the younger and the older generations show a relatively similar interest in BNPL. According to a survey conducted by PYMNTS, 30% of boomers and 50% of Gen Z have used BNPL at least once, indicating an increasing trend in the uptake of this payment option.

Reasons for Increased BNPL Use

Impact of COVID-19 on BNPL Use

The COVID-19 pandemic had a significant impact on the way consumers handle their finances. According to Finder, the use of BNPL services in the US increased by 215% between March 2019 and March 2020.

The survey also found that BNPL became a popular payment option for essential items such as groceries and health products as people turned to online shopping in fear of COVID-19 exposure. Additionally, with businesses impacted by the pandemic, BNPL provides merchants the option to offer manageable payment terms for their products and services while still sustaining their income.

Top Products Purchased with BNPL

Although BNPL is an attractive payment option for a range of products and services, some items are more popular than others. According to PYMNTS, fashion and beauty products are among the top products purchased using BNPL, followed by electronics, home goods, and sporting goods.

Retailers such as Adidas, H&M, and Sephora offer BNPL options, making it more accessible for their customers.

Benefit of BNPL in Building Credit Scores

BNPL offers one more unique advantage that sets it apart from other payment options: it can help build credit scores. When payments are made on time, the use of BNPL provides a channel for credit reporting agencies to track and assess individual credit activity.

This reporting can lead to an increase in credit score, making it an attractive option for individuals looking to establish or improve their credit rating.


In conclusion, BNPL is an excellent alternative for those looking for flexible payment options. Although Gen Z mainly views the payment method as favorable, older generations are more cautious.

The uptake of BNPL continues to rise, with the COVID-19 pandemic significantly accelerating the trend. Additionally, BNPL offers benefits such as the ability to build credit scores and support for essential purchases.

With a growing range of retailers offering BNPL, it will undoubtedly remain a viable payment option in the future.

Potential Risks of BNPL

There’s no doubt that BNPL has its advantages, but it also comes with potential risks. Here are two of the most significant risks surrounding BNPL.

Encouraging Overspending

One of the biggest risks of BNPL is that it can encourage overspending. With BNPL, customers can purchase products with zero upfront payment, so it’s easy to lose track of the amount that they spend.

Additionally, with BNPL, customers may be more willing to spend more than they would if they were paying cash. This is especially true when BNPL options are combined with tempting discounts, limited-time offers, and other marketing strategies.

As a result, customers may find themselves overspending and unable to manage their repayments. Generation Z’s Tendency to Return BNPL Purchases

Another risk of BNPL is the tendency of Gen Z to make frequent returns.

Although Gen Z is known for their love of online shopping and BNPL, they also have a high rate of returns. According to a report by Happy Returns, 35% of returns are made by Gen Z.

This poses a risk for BNPL providers because returned items are no longer generating revenue, but the cost for financing the purchase still stands.

Tips for Responsible BNPL Usage

Now that we’ve highlighted the potential risks of BNPL, let’s discuss how to use this payment option responsibly.

Importance of Budgeting Tools

Before considering BNPL, it’s crucial to assess what you can afford to repay and prepare a budget. BNPL providers offer several budgeting tools that can help you evaluate your spending patterns and manage your finances.

For instance, most BNPL providers have repayment calculators that can help you determine how long it will take to pay your balance if you only pay the minimum amount. Some BNPL providers also offer budgeting apps that allow you to track your expenses and monitor your spending.

These tools can help you avoid overspending and manage repayments.

Importance of Payment Reminders

BNPL providers understand that missed payments can cause inconvenience to their customers. As a result, they provide payment reminders when repayment is due.

Payment reminders help you stay current on your repayments and avoid missing deadlines, which can incur late fees and damage your credit score. Additionally, some BNPL providers offer flexible repayment options.

For instance, some BNPL providers allow customers to reschedule payments at no cost if something unexpected occurs.


While BNPL has some risks, these can be mitigated by using the payment option responsibly. Preparing a budget and using BNPL’s budgeting tools and payment reminders are crucial to ensuring that you can afford to repay balances.

If you have concerns about using BNPL responsibly, it’s essential to seek expert advice from financial advisors. By taking the right precautions, using BNPL can be a beneficial payment option that can make purchasing more accessible and more manageable.

In summary, BNPL is a convenient and flexible payment option, which has become increasingly popular among different generations. However, it is essential to be aware of the potential risks associated with this payment option, such as overspending and frequent returns, to avoid financial difficulties.

To use BNPL responsibly, it is crucial to prepare a budget, use budgeting tools and payment reminders, and seek expert advice when unsure. BNPL will likely remain a popular payment option in the future, and responsible use can help individuals benefit from its advantages without falling into financial difficulties.

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