Satisfaction with buy now, pay later services is growing

The popularity of Buy Now, Pay Later services continues to grow, particularly among younger consumers, according to the latest J.D. Power 2025 U.S. Buy Now Pay Later Satisfaction Study. The study points to a significant year-over-year increase in the number of consumers using BNPL products, with the highest usage rates observed among Generations Y and Z, especially during the holiday season.

Sean Gelles, senior director of banking and payments at J.D. Power, noted the growing appeal of BNPL services, particularly during periods of increased spending like the holidays. 

"The BNPL segment has undoubtedly grown in popularity, with more customers using these services than ever before," Gelles said in a press release. He emphasized the role of card-based BNPL products in maintaining high satisfaction levels, as these services leverage existing brand awareness and equity to retain customers.

Key findings from the 2025 study include:

• Generational usage trends: Nearly half of consumers from Generations Y and Z reported using BNPL services, compared to just 21% of consumers from other generations. Notably, during the 2024 holiday season, more Gen Z consumers opted for BNPL over credit cards for the first time in the study's history. These consumers are drawn to BNPL for its competitive repayment terms, positioning it as an attractive alternative to traditional credit cards.

• Satisfaction levels: Gen Y consumers reported the highest overall satisfaction with their BNPL lenders, scoring 627 out of 1,000. Factors such as convenience, cost, family recommendations, and brand trust were cited as key reasons for their satisfaction. Gen X followed with a satisfaction score of 620, while Gen Z scored 617.

• Performance of card-based products: Card-based BNPL solutions, offered by legacy card issuers, received high satisfaction ratings across various dimensions, including digital account management, security, and acceptance. These products benefit from strong brand affinity and consumer trust.

• Decline in satisfaction for some brands: The study noted a significant decline in satisfaction for two brands, Zip and PayPal, which saw drops of 30 and 35 points, respectively. This contributed to an overall 13-point decline in satisfaction across the study.

In terms of brand rankings, Plan It by American Express led the pack with a satisfaction score of 706, followed by Chase (675) and Citi Flex Pay (663).

Potential pitfalls

BNPL is an updated version of the old “layaway” plan offered by early 20th-century retailers, but with one big difference. Under the old plan, the merchant held the item until the consumer had enough money to pay for it.

With BNPL, the consumer receives the merchandise and pays for it in three or four interest-free payments every two weeks. If used only a couple of times a year for large purchases it can be a cost-effective way to finance a purchase.

But Marcus Sturdivant Sr., a Charlotte, N.C., financial advisor, says consumers who use it multiple times for all types of purchases are simply “kicking the can down the road.” He said there is evidence that many young people have numerous BNPL accounts that are adding to their debt.

“Could there be a bubble in buy now and pay later when the bill is due” he asked in an interview with ConsumerAffairs. “If so, it would be due to Gen Z not wanting to pay the debt.”

While most BNPL services don’t charge interest for on-time payments, not paying the bill incurs late fees and are usually turned over to a debt collector.

In January, the Consumer Financial Protection Bureau reported that BNPL applications and approval rates increased significantly from 2019 to 2022. The number of daily applications rose from just over 100,000 in 2019 to well over 1 million in 2022.