Annual buy now, pay later (BNPL) users in the U.S. 2020-2023, by age and gender

BNPL use in the United States declined among all age groups in 2023 for the third successive year. A recurring survey reveals the overall share of respondents who used buy now, pay later decreased by 15 percentage points between June 2022 and July 2023. The decline was highest among younger generations. Over 61 percent of respondents ages 18 to 24 said in 2022 they had used a BNPL service - a figure significantly higher than the almost 38 percent recorded in a previous survey in 2020. By 2023, this penetration rate reached 42 percent. The trends observed here are in contrast with U.S. e-commerce vendors who were planning to add BNPL to their website's payment options in 2022.

What caused the decline in BNPL use?

The source does not explain why figures declined between surveys. Cost of living did change online shopping payment behavior in the United States. Credit cards, BNPL, and crypto were all used more often, but neither saw the biggest growth: 51 percent of respondents who changed their payment habits because of the rising cost of living in 2022 are paying online with debit cards more often than they did in the previous year. BNPL was not a popular choice for everyday shopping. Groceries ranked among the least likely product types for which U.S. consumers would use BNPL. The worsening of economic conditions may well prevent the growth of BNPL in 2023 instead of it being a contributing factor.

An industry under pressure

BNPL companies face a challenging environment in 2023. Klarna's valuation dropped by 85 percent amidst staff cuts and investor observations the Swedish BNPL provider was not profitable enough. Macroeconomic developments seem to impact the young industry significantly, especially as it is still finding a profit model. Increasing interest rates, especially, puts pressure on these providers. Consequently, Klarna is using generative A.I. as an additional revenue stream. The company is one of 13 that uses a ChatGPT plugin. Artificial intelligence technology helps consumers find curated products based on their search behavior and preferences.