Buying Now, Paying Later: The Online Shoppers Driving One of Retail’s Biggest Trends

Use of pay by installment services among online shoppers has increased over the last two years.

Fintech company Klarna’s recent multibillion-dollar valuation signals the growing potential of retail’s latest trend: pay-by-installment services, otherwise known as “buy now, pay later.” In a recent study by The Harris Poll on behalf of Ad Age, consumers reported using these services more frequently than they were before the pandemic, and younger consumers are leading the way.

Thirty percent of online shoppers say they have used pay-by-installment at least half of the time when making a purchase in 2021 compared to 25% who reported opting for “buy now, pay later” options at a similar rate in 2019.

Younger shoppers, especially, are warming up to the “buy now, pay later” industry, and they represent much of its growth. Fifty-two percent of online shoppers aged 18-34 report using pay-by-installment services at checkout at least half of the time in 2021 compared to just 39% in 2019.

“Buy now, pay later” options are also popular among men, who report using these services more frequently than women. Thirty-seven percent of men use pay-by-installment options at least half of the time when shopping online, but only 30% of women report using these services at the same rate.

Moreover, among online shoppers familiar with Klarna, 65% of men report using it at least half of the time when buying merchandise online versus only 29% of women familiar with the service.

Perhaps surprisingly, household income and education do not appear to play a significant role in whether consumers use these services as online shoppers across income brackets and education levels report similar rates of usage.

For example, 31% of online shoppers with annual household incomes below $50,000 said they use these services at least half of the time when buying online compared to 30% of online shoppers with incomes north of $100,000. Similarly, 31% of online shoppers with a high school education or less report using pay-by-installment services at least half of the time when making a purchase, compared to 33% of college graduates.

This survey was conducted online within the United States by The Harris Poll on behalf of Ad Age during March 5-8, 2021, among 1,068 U.S. adults ages 18 and older. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was used to adjust for respondents’ propensity to be online. For more information on methodology, please contact Dami Rosanwo.

Download full data here.