BNPL trends: What’s shaping the BNPL market in 2025

Buy Now, Pay Later (BNPL) has gone from a niche payment method to a shopping staple, giving consumers more financial wiggle room and retailers a boost in sales. What started as an alternative to credit cards is now a full-fledged player in mainstream spending - but the landscape is still changing. Economic pressures, evolving regulations, and competition from traditional credit providers are reshaping how consumers and businesses engage with BNPL.

For fintech providers, retailers, and marketers, keeping up with these shifts isn’t just smart - it’s essential. The BNPL world in 2025 is packed with opportunities, but also a fair share of challenges. Here’s what’s driving the next wave of BNPL growth.

BNPL growth and market expansion

BNPL isn’t going anywhere, but its growth story is getting more nuanced. While Gen Z adoption jumped 10% from Q4 2022 to Q4 2024, overall BNPL usage dipped by 10% in the same period - a sign that different demographics are engaging with it in different ways.

Where is BNPL thriving? APAC is leading the charge. More than 1 in 5 people in APAC used BNPL online last week, with Indonesia (38%) emerging as the world’s most engaged BNPL market.

And it’s not just retail that’s seeing BNPL action. The service is making waves in other industries, like travel and digital subscriptions. In Europe, BNPL travel bookings have climbed 16% year-on-year, showing how shoppers are using it for bigger-ticket purchases.

So, what else are people actually buying with BNPL? Turns out, a lot of non-essentials and tech gadgets. BNPL users are over 75% more likely to buy drones, robot vacuum cleaners, and electric users compared to the average consumer. They’re also 32% more likely than average to say they spend what they want when they feel like it, reinforcing BNPL’s position as a tool for discretionary spending.

Who’s using BNPL? Consumer adoption and behavior

BNPL isn’t a one-size-fits-all solution - it’s a different experience for every shopper. But what we do know is that BNPL users are 60% more likely to choose premium versions of products, favoring brand names and quality over budget buys. They’re also 17% more likely than average to be married, which may suggest that higher household expenses and the increased costs associated with families make BNPL’s flexibility especially appealing.

Generational differences also shape BNPL habits. Millennials using BNPL prioritize brand loyalty, choosing well-known brands over cheaper alternatives. Gen Z, on the other hand, is more focused on tech-related purchases, with BNPL fueling spending on PCs, laptops, and wearable devices. It’s also playing a big role when it comes to travel. Over 25% of millennials who use BNPL plan to buy flights within the next six months, showing how flexible payments are influencing major purchases. 

BNPL users tend to be highly fashion-conscious - they’re 44% more likely to care about fashion trends and 28% more likely to be impulsive when buying luxury products compared to credit card users. This trend-driven mindset means they’re likely to see a must-have item and feel the need to grab it immediately, and BNPL enables this kind of spending. 

Of course, economic uncertainty is also shaping BNPL reliance. As costs rise, BNPL appeals to those looking for flexible payment options over traditional credit. BNPL users are more likely to prefer paying to access a product/service rather than owning it outright, reinforcing the shift toward subscription-based and flexible spending models. However, compared to credit cards, BNPL lacks the same flexibility for in-person transactions and doesn’t contribute to credit scores, which could impact its long-term adoption.

Trust, regulation, and industry challenges

The normalization of BNPL services in e-commerce has caught the attention of regulators worldwide. Governments and financial institutions are increasing scrutiny over consumer debt risks, lack of credit checks, and transparency concerns, raising questions about how BNPL should be regulated. All of this could lead to tighter policies around approval processes and repayment terms.

For consumers, financial literacy is another hurdle. BNPL users are 34% more likely to lack confidence in their current bank or financial services provider, highlighting a broader trust issue in the finance sector. However, there’s still optimism - BNPL users are 10% more likely than average to believe their financial situation will improve in the next six months, suggesting they see BNPL as a tool for financial flexibility rather than a source of debt.

To keep regulators happy and consumers engaged, BNPL providers are adapting. Some are enhancing transparency with clearer repayment structures and fee disclosures, while others are integrating financial wellness tools to help consumers manage spending more effectively. With Gen Z 19% more likely than the average consumer to seek online financial courses, there’s a growing demand for education alongside convenience - something BNPL providers are starting to address.

The future of BNPL: Where is the industry headed?

Financial strain is undoubtedly shaping consumer spending habits at the moment. 47% of BNPL users spend over 50% of their income on expenses, making affordability and repayment flexibility more critical than ever. Rising interest rates and inflation could further influence how consumers weigh BNPL against other payment options.

At the same time, BNPL is facing growing competition from traditional credit options. While use of BNPL services has declined, credit card usage has increased by 8% since 2021. 0% interest credit cards now offer a similar alternative to BNPL, with the added benefit of building credit scores and being usable for in-person transactions.

Retailers are taking note of these shifts, with more brands integrating Klarna payments - further embedding BNPL into mainstream shopping. Going forward, its success will hinge on striking the right balance between affordability and innovation while staying competitive against traditional finance.

Final thoughts: What businesses need to know

BNPL is still a force in consumer finance, but the landscape is shifting fast. Brands that can understand what consumers really want and adapt to their evolving spending habits will be best positioned to thrive.

Key tips and takeaways:

• Target millennials and Gen Z with premium and tech-driven offerings. These demographics are the most engaged BNPL users - millennials value brand loyalty, while Gen Z leans into tech purchases.
• Leverage BNPL for high-value and discretionary purchases. BNPL users are more likely to spend on luxury fashion, home tech, and insurance, making these sectors prime for BNPL-driven strategies.
• Address financial education and trust issues. Many BNPL users lack confidence in traditional financial institutions. Providers that prioritize transparency, responsible lending, and financial literacy will build lasting relationships.
• Optimize BNPL for travel and seasonal spending. With BNPL adoption rising in travel, brands can integrate flexible payment options, especially around peak booking seasons.
• Stay ahead with data-driven insights. BNPL users exhibit distinct spending patterns, from impulsive luxury purchases to strong online shopping habits. Brands that track these shifts in real time will be best equipped to adapt.

Want to stay ahead of BNPL trends? GWI Spark, our free AI-powered market research tool, helps businesses explore real-time data on BNPL adoption, spending habits, and financial behaviors. Try it today to unlock the insights that matter most to your business.