Dive Brief:
- Close to 75% of baby boomers will use split payments to purchase holiday gifts this year, per a study of 5,248 consumers from Splitit and PYMNTS Intelligence.
- Among other cohorts, 60% of Gen Z consumers will use a flexible plan to purchase holiday gifts, while 68% percent of Gen Xers and 65% of millennials plan to do the same.
- The survey, which took place between Sept. 30 and Oct. 5, found that 60% of higher-income individuals making $100,000 and more use buy now, pay later services, while 48% of lower-income consumers making less than $50,000 use the service.
Dive Insight:
While baby boomers were the most likely generation to use split-payment services for holiday purchases, the high interest from all of the other cohorts indicates the growing trend of alternative payment options, per the report.
"Gen Zers are well known for being price-sensitive, so it's quite surprising our research found that boomers are the age group planning to use pay later most often for when purchasing gifts this holiday," Splitit CEO Nandan Sheth said in a statement. "That underscores the widespread demand for alternative payment options across all demographic groups.”
Close to half (46%) of Gen Z consumers increased their usage of credit card installments, compared to 44% that increased their use of traditional BNPL services. It marked the highest increase of credit card installment usage across generations and was more than double that of boomers, per the study.
In an email to Retail Dive, Sheth remarked that while traditional BNPL services often advertise themselves as interest-free, they typically require consumers to open a new line of credit or use a separate platform to sign up, often adding late fees.
Sheth added that boomers are often on fixed incomes and want to avoid high-interest credit card debt, yet still want to indulge in holiday gifts for loved ones and themselves. Credit card installments without interest offer this group a BNPL scenario that often comes with rewards and loyalty points.
“What’s particularly noteworthy is how card-linked installments offer boomers the best of both worlds: financial flexibility paired with the continued benefits of credit card usage, such as loyalty points and rewards,” Sheth said. “It’s a win-win situation that resonates deeply with this demographic.”
In the current study, Splitit found that 67% of parents planned to use BNPL to finance their holiday spending.
From a separate study done by Splitit and PYMNTS Intelligence in June, the firm found that consumers were spending twice as much when they used their credit cards for interest-free installments compared to the traditional BNPL plans. The study also found that some 90% of retailers believe card-linked installments boost customer acquisition and retention.
