A Consumer Pulse survey conducted with the help of credit report guide TransUnion has revealed a shift in generational spending habits. While Gen Z still drive the main thrust of retail spending – a trend which will continue as they continue to reach financial maturity – it is now Gen X and Millennials who spend more at buy now, pay later services.
Money spending online
This is just one example amidst a wider trend of digitization, which has enabled BNPL services to operate. Digitization in retail has been ongoing for several years, picking up pace in 2020. Through online banking and e-commerce, money is primarily handled and spent digitally over [through] the physical world. The way we spend money is becoming digitized because we work, buy and find services online, pushed by tech innovations like the cloud or widening entertainment avenues. In entertainment, sectors like iGaming exist to provide clients with games over the internet. Services like the Paddy Power site offers online slot machines, with a wide variety of themed games available, all operating via account credit and digital payment. Thanks to this ongoing digitization in finance, it’s easier and more convenient than ever to enter a BNPL deal, make piecemeal payments and sidestep interest rates.
This is where Consumer Pulse and TransUnion’s survey comes in. Spanning 1,000 respondents in the summer of 2023, the survey identified a clear trend of Gen X and Millennials spending more through BNPL services than their Gen Z counterparts. The survey asked about financial action in the last 12 months, meaning this shift had become evident as early as July 2022. Find a more comprehensive breakdown of the survey’s findings below.
TransUnion survey findings
The Q3 2023 Consumer Pulse survey made the £500 mark the lynchpin of their findings. When asked if they had spent over £500 with BNPL services, it was found that 54% of Millennials had done so. Beside them were Gen X at 39% and then Gen Z at 35%. While the divide between Gen X and Z is slight, the fact the older cohort overtook the younger one quickly became the survey’s unexpected finding.
Speaking for TransUnion, chief product officer Kelli Fielding said that: “It’s clear that for the majority, buy now, pay later is about convenience and flexibility, rather than being driven by financial constraints and that aligns with our expectations.”
To account for outlier responses, the survey also asked if the respondents believe they will apply for more BNPL services in the coming 12 months. This made the generational divide even starker – Millennials at 32%, Gen X at 22% and Gen Z at just 15%. Most money was spent on clothing, at nearly half – 48%. There were also seasonal variations, with summer being a spending favourite. This is a known trend observed and reported on by NBC in the past.
The reasons for interacting with BNPL services hadn’t changed, indicating no other identifiable factor responsible for the generational divide. The top reasons for BNPL services were spread payments, according to 61%, while 48% also preferred avoiding interest rates. What was significant was that, in the absence of BNPL, respondents said they’d use their debit card as an alternative. This meant that the BNPL service had become their primary mode of payment, over the debit card, and that they had the money to satisfy purchases outright but chose BNPL anyway. This is the basis for Fielding’s remarks about convenience, not constraint, being the basis of BNPL usage.
As a rule, older generations typically shy away and take longer to embrace more recent tech innovations. Reporting from Slate, using Pew Research data, previously showed that even when older generations know how a technology works, they may deliberately avoid it. Convenience is one of the strongest influences on behaviour, which seems to have positioned BNPL over traditional fintech.
