Buy-now-pay-later (BNPL) use in the U.S. has more than doubled since 2020.

“[T]hat’s not much of a surprise if you follow digital payment trends throughout the pandemic,” Jordan McKee, principal research analyst at S&P Global Market Intelligence, said recently during the company’s “Financial Services and Tech Companies at the Crossroads” webinar.

BNPL has “been a catalyst for a whole host of different alternative payment methods,” McKee said, noting that younger consumers have especially taken to the flexible payments trend.

In fact, 51% of Generation Z consumers — born between 1997-2012 — and 42% of millennials — born between 1981-1996 — use alternative payment methods, McKee said.

Banks and financial institutions can capitalize on consumer interest in flexible payments by integrating alternative payment options into their platforms. Here are three recommendations for implementing BNPL, according to S&P Global:

1. Team up with major providers: “Prioritize top-of-wallet strategies with major buy-now-pay-later providers to drive spend. What we see is that these repayments are primarily being made on debit cards after pay,” McKee said, noting to make sure these strategies are also focused on “younger consumers that are likely to be using these services.”
2. Educate consumers: “We continue to see consumers going to their financial institution for more information on emerging payment methods, like buy now pay later,” McKee said. “It’s very important that there’s information available on both the pros and the cons associated with this payment method and what they should be aware of … ensuring they understand this is actually a form of debt.”
3. Leverage BNPL opportunities: Financial institutions should recognize that “there are opportunities to bring more of a buy-now-pay-later-like experience to debit post-purchase,” McKee said. “This is something we’ve seen Chase doing at the moment and we’ve seen a firm actually create a white-label platform that financial institutions can leverage to create a BNPL capability banked into the debit product, and we expect that will become an increasing area of activity in the years ahead.”

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