BOSTON — Buy now, pay later providers succeeded in disrupting the consumer lending market over the last year, but they have not been able to overcome the entrenched advantages held by traditional credit card issuers, according to a new report.
The report, from PYMNTS Intelligence and titled, “One Year In: What The Pay Later Data Actually Reveals,” found that consumers continued to use credit card installment plans at roughly twice the rate of buy now, pay later, or BNPL, products between April 2025 and March 2026. The findings are based on eight survey waves conducted over the past year involving approximately 2,500 U.S. consumers per survey.
According to PYMNTS Intelligence, BNPL providers initially appeared poised for rapid expansion as younger consumers embraced app-based financial tools and digital-first payment options. But traditional card issuers responded by promoting installment features already built into existing credit card products.
The report said that strategy allowed card issuers to capitalize on longstanding customer relationships and eliminate friction for consumers who already held credit cards.
“Card issuers didn’t need to introduce new products to compete with BNPL,” PYMNTS Intelligence said in the report. “Instead, they began to more aggressively promote installment plan capabilities already embedded in existing credit offerings.”
Key Findings
Among the key findings:
- Credit card installment plans outpaced BNPL usage by roughly 2-to-1 across all eight survey waves over the past year.
- Gen Z, millennials and bridge millennials consistently used credit card installment plans at rates between 1.8 and 2.5 times higher than BNPL products.
- Consumers with annual household incomes above $150,000 used BNPL products at roughly double the rate of consumers earning less than $50,000 annually.
- Consumers using BNPL products for recurring essentials such as groceries, utilities and subscriptions reported significantly higher late-payment rates than those using BNPL for discretionary purchases.
Closing the Pay Later Gap
PYMNTS Intelligence said BNPL providers had hoped to take a leading role in installment lending, particularly among younger consumers, but the anticipated disruption has yet to fully materialize.
The report estimated that more than twice as many consumers used credit card installment plans as BNPL products between April 2025 and March 2026, and that ratio remained largely unchanged during the year.
PYMNTS Intelligence attributed much of that stability to the incumbency advantage enjoyed by traditional card issuers. Existing cardholders can activate installment plans without opening new accounts or filing separate credit applications, while many BNPL providers require consumers to complete both steps.
“This structural advantage for card issuers has so far proven unbeatable,” the report stated.
Younger Consumers Play Hard to Get
The report states that BNPL’s growth narrative has centered heavily on younger consumers, particularly Gen Z and millennials, who were viewed as more likely to adopt app-based financial tools and less tied to traditional credit cards.
But survey results showed younger consumers continued to favor card installment plans over BNPL products.
The latest survey found:
- 47% of Gen Z consumers used credit card installment plans in the prior 90 days, versus 23% who used BNPL.
- Millennials and Bridge Millennials showed nearly identical usage patterns.
- Across all survey waves, younger consumers used card installment plans at about twice the rate of BNPL products.
PYMNTS Intelligence said the findings indicate BNPL providers have struggled to break through even with their most heavily targeted demographic groups.
The High-Income Surprise
According to PYMNTS Intelligence, BNPL products were originally marketed as a financial inclusion tool designed to expand credit access for younger and lower-income consumers without established credit histories.
But a year of survey data showed adoption rates were strongest among high-income households instead.
The report found:
- Only 10% of consumers earning less than $50,000 annually used BNPL products in the prior 90 days.
- NPL usage rose modestly to 12% among households earning between $50,000 and $100,000 annually.
- Usage increased to 18% among households earning between $100,000 and $150,000 annually.
- 20% of households earning more than $150,000 annually reported using BNPL products.
“These findings indicate that BNPL often functions less as an access tool and more as a spending optimization strategy,” the report stated.
The Recurring Expense Mismatch
The report said that mismatch between fixed installment schedules and recurring obligations appears to contribute to significantly higher late-payment rates.
According to the survey:
- 76% of consumers who used BNPL for essentials reported making at least one late payment during the prior 90 days.
- The late-payment rate fell to 43% among consumers who used BNPL strictly for one-time or discretionary purchases.
- The difference in late-payment rates remained roughly 30 percentage points across all eight survey waves.
“BNPL works best for planned and discretionary purchases, and becomes much harder
