Why Pay-Later Options Are Redefining Holiday Spending in 2025

Pay-Later Options Move Into the Mainstream

The way consumers pay is changing quickly, and younger generations are leading the charge. As the 2025 holiday season approaches, pay-over-time options like Buy Now, Pay Later (BNPL) are expected to play a major role in how people spend.

Once viewed as a niche financing tool, BNPL has become a mainstream payment method that reshapes how consumers manage liquidity, budget for large purchases, and decide where to shop. PYMNTS Intelligence data shows that adoption surged from 29.5% in April to 37.8% in September 2025, signalling both maturity and untapped opportunity.

Younger Consumers Embrace Flexibility

Gen Z and millennials are driving this transformation. Among Gen Z alone, 6.4% used BNPL in September, while credit card usage climbed to 27.4%, up from just 17.1% earlier in the year.

For younger consumers, instalments are not just a payment option, they are a budgeting strategy. 45% of Gen Z and 42% of millennials reported using instalments, compared to 70% of households under $50,000 that still avoid them entirely.

This generation views BNPL as a liquidity tool rather than a last-resort credit product. The normalization of instalment payments reflects a shift in mindset, where financial flexibility is now part of everyday spending.

BNPL and the Paycheque-to-Paycheque Economy

The surge in BNPL use is also linked to broader financial pressures. PYMNTS Intelligence found that 75% of consumers living paycheque to paycheque used a pay-later plan in 2023 and 2024 across income levels. Those struggling with bill payments are four times more likely to rely on BNPL compared to their financially stable peers.

Another report found that cash-short consumers are 3.5 times more likely to turn to BNPL between paycheques. Together, these insights show how instalments have evolved into a financial safety net and a way for consumers to manage cash flow rather than take on debt.

Financing Options Shape Store Choice

For merchants, BNPL’s impact goes far beyond checkout. According to PYMNTS Intelligence, roughly 40% of consumers said the availability of flexible financing strongly influenced where they chose to shop, particularly for events, travel, home services, and food delivery.

Even in everyday categories like utilities and healthcare, nearly 1 in 5 consumers said instalments factored into their provider decisions. This means that merchants without financing options risk losing customers to competitors who do. In discretionary categories, flexibility is not a perk, it is a conversion driver.

BNPL Aligns With Spending Motivations

BNPL’s popularity also connects directly to consumer psychology. It is perceived as easier to apply for (21.7%) and more likely to be approved (20.7%) than credit card instalments.

While credit cards remain preferred for rewards, BNPL’s accessibility and immediacy make it a go-to for both large and small purchases. 17% use it for purchases over $3,000, while 13.8% use it for under $100. That versatility reinforces BNPL’s place as a flexible, trusted payment method across price tiers.

Positioned for the Holiday Season

BNPL is no longer a seasonal experiment. It is a core part of modern consumer behaviour. As the holidays approach, the combination of instant approval, convenience, and perceived affordability positions BNPL as a powerful tool for both shoppers and merchants.

Retailers offering pay-over-time options at checkout, whether online or in-store, will have a clear advantage. Those that do not risk missing out on conversion opportunities, larger basket sizes, and customer loyalty that extends beyond the holiday season.

Payment Solutions with Kubera Payments

At Kubera Payments, we help businesses across North America move millions of dollars daily, whether in-store, online, or on mobile. Our team of payment experts is here to guide you through the complexities of payment processing, ensuring your transactions are secure, reliable, and PCI-compliant. We have strong relationships with a wide network of acquirers and can help you find the right front-end and technology solutions to work together.

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Contact our team at sales@kuberapayments.com or 604-484-9278

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