Holiday pay later plans entice millennials, parents, self-gifters

As holiday shopping ramps up, consumers are increasingly turning to pay later options for both gift purchases and self-gifting, according to new research by Splitit and PYMNTS. Their study, The Use of Card-linked Installment Plans in Holiday Shopping, revealed that 38 percent of consumers plan to use pay later options for treating themselves this holiday season.

The report underscores a golden opportunity for retailers to leverage these flexible payment options to attract customers, especially younger shoppers and parents.

The study indicates that millennials and parents are among the primary demographics driving this trend. Nearly two-thirds of consumers plan to use flexible payments for gifting; 38 percent of millennial respondents said they intend to use pay later options more often this holiday season than throughout the rest of the year. This preference, researchers found, indicates a shift toward using payment flexibility to manage holiday expenses while treating loved ones and themselves.

Easing guilt for large purchases

"Millennials and parents are especially keen on using pay later options to make large purchases more manageable," said Nandan Sheth, CEO of Splitit. "This holiday season, 67 percent of parents are planning to use these options, finding that they help justify larger expenses while keeping finances in check. The opportunity is ripe for merchants to attract new customers, as 43 percent of consumers who intend to use pay later options say it influences where they shop."

For millennials and parents, pay later plans also alleviate the guilt of larger purchases. Nearly half of parents (49 percent) reported that these options help reduce the stress of splurging, while 52 percent of millennials feel similarly. With 62 percent of consumers wanting to know upfront if pay later is available, the study highlights the importance of educating shoppers about these options early in the shopping experience.

The survey found that credit card-linked installments have been the most popular pay later option over the past year, used by 39 percent of consumers, with buy now, pay later (BNPL) services close behind at 38 percent, and merchant store cards following at 31 percent.

Twenty-eight percent of respondents indicated they are highly likely to rely on pay later plans during the holiday period. Two-thirds of those intending to use these options will buy gifts for others, with clothing and accessories leading as the top categories, followed by luxury items such as vehicles, furniture and electronics.

More payment options a boon for retailers

Moreover, availability of pay later options significantly influences shopping decisions. Roughly half of millennials and parents surveyed indicated that the availability of their preferred pay later method strongly impacts their choice of retailer. The research suggests that early promotion of these options may attract new users, as 90 percent of respondents who haven’t used pay later plans before said they would be more likely to try them if they are presented early in the purchase journey.

With these insights, researchers noted, the study presents a clear message to merchants: offering and highlighting pay later options not only appeals to budget-conscious shoppers but can also serve as a powerful tool for customer acquisition in an increasingly competitive holiday shopping landscape.

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