BNPL usage surges among younger consumers, J.D. Power finds

The buy now, pay later (BNPL) financial model continues to gain traction among U.S. consumers, with notable growth observed during the 2024 holiday season. According to the J.D. Power 2025 U.S. Buy Now Pay Later Satisfaction Study, released on Feb. 27, 2025, the adoption of BNPL services has risen significantly year-over-year, particularly among Generations Y and Z.

The study revealed that 42 percent of Gen Y (born 1977 through 1994) and Gen Z (born 1995 through 2007) consumers have used BNPL services, compared to 21 percent from other generations.

Notably, Gen Z consumers participating in the study reported that during the 2024 holiday season, they used BNPL options more frequently than traditional credit cards—a first in the study's history. This shift is largely attributed to younger consumers seeking competitive repayment terms and viewing BNPL as a viable alternative to credit cards.

Sean Gelles, senior director of banking and payments at J.D. Power, commented on this trend, stating, "The BNPL segment has undoubtedly grown in popularity, with more customers using these services than ever before. That's been especially true around seasonal periods of higher spending, such as the holidays."

Brand recognition a plus

In terms of customer satisfaction, Gen Y users reported the highest levels, with a satisfaction score of 627 out of 1,000. Factors influencing their choice of BNPL provider include convenience, cost-effectiveness, recommendations from family members and brand trust. Gen X consumers, despite a lower utilization rate of 29 percent, provided the second-highest satisfaction rating at 620, followed by Gen Z at 617.

The study also highlighted the superior performance of card-based BNPL products offered by established financial institutions. Plan It by American Express led the satisfaction rankings with a score of 706, followed by Chase at 675 and Citi Flex Pay at 663. These services benefit from existing brand recognition and customer trust, offering robust digital account management, security and widespread acceptance.

Conversely, some BNPL providers experienced declines in customer satisfaction. Zip and PayPal saw significant drops of 30 and 35 points, respectively, contributing to an overall 13-point decrease in the study's average satisfaction score. This decline is partly due to an increase in customers facing difficulties in meeting payment obligations during the study period.

The J.D. Power 2025 U.S. Buy Now Pay Later Satisfaction Study, now in its third year, surveyed 4,343 customers between February 2024 and January 2025. It is part of a series of studies examining various POS payment options. Other studies in the series include the POS Choice Satisfaction Study, Debit Card Satisfaction Study, and Digital Wallet Satisfaction Study.

This year's findings underscore the growing influence of younger consumers in the BNPL market and the competitive advantage held by traditional financial institutions offering card-based BNPL solutions. As the landscape evolves, providers may need to adapt to shifting consumer preferences, particularly among younger demographics seeking flexible and transparent payment options.

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