Buy now, pay later is now a mainstream payment method, with Gen Z and millennials leading the way, per the report from San Jose, California-based PayPal, which offers such pay later services. Other companies that offer buy now, pay later services include London-based Klarna and San Francisco-based Affirm.

Previous research has indicated that Gen Zers and millennials will rely on BNPL providers this holiday. Roughly 20% of shoppers from those generations said they expect to use BNPL during the 2025 holiday season, according to an Invoice Home survey released in July. 

Last year, Gen Z used buy now, pay later services more than they used credit cards during the holidays — a first for consumers, according to a consumer survey by the market research firm J.D. Power. 

Shoppers that know they can pay over time are more likely to complete a purchase, said Michelle Gill, general manager of PayPal’s small business and financial services group. “PayPal data shows offering BNPL leads to a 91% higher average order value for enterprises and 62% higher for small businesses, meaning it isn't just a nice-to-have (for merchants), it's a proven advantage to win,” she said in the release.

Though many consumers are turning to BNPL platforms to stretch their holiday budgets, some users are struggling to pay the installment payments.

Nearly half of U.S. adults who have used BNPL services have had at least one financial hardship, according to a survey released in May by the British market research firm YouGov. Of the BNPL users who responded to the survey, almost a quarter said they exceeded their budget, and 16% said they missed a bill payment after using BNPL to make a purchase.