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Written by Cyndie Martini
on March 23, 2021

Millennials and Gen Z are two large groups that merchants would do well to follow the purchasing habits of. Millennials make up the cohort of people born between 1981 and 1996. In 2020, they were ages 24 to 39. Gen Z is the group born after 1996. Millennials came of age during the Great Recession, which shaped their outlook on jobs and how they spend their money. Gen Z came of age during a time of low unemployment and a strong economy. However, like Millennials, Gen Z has been walloped by the 2020 pandemic.

Millennials are not a group who live paycheck to paycheck. They are very financially savvy. Both cohorts look to avoid credit cards and strive to maintain low levels of debt. This has led them to use BNPL (buy-now-pay-later). BNPL took off during 2020 because of how the pandemic shaped consumer purchasing behavior. For Gen Z, their use of BNPL increased by an astounding 201% year over year.

The March release of PYMNTS’ Buy Now, Pay Later Tracker® found that 26% of Millennials used BNPL for their most recent online purchase. For Gen Z, the number was 11%. Gen Z may be using BNPL as an intermediary payment tool. It provides the flexibility to go past debit card spending limits and can be used by those who may not yet qualify for a credit card.

Younger consumers who are in the early stages of their careers may not have access to large amounts of credit. Spreading payments over four installments, which BNPL does, allows these consumers to purchase larger ticket items that would have otherwise been out of reach.

While many merchants have not likely heard of BNPL, offering it is another way to attract a new segment of buyers. BNPL also has the benefit of potentially larger and more frequent purchases.

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