The Canadian retailer’s must-have monthy recap

Subscribe to The Checkout

The Lowdown on Buy Now, Pay Later vs. Private Label Credit Cards

By Spencer Cain

Can Buy Now, Pay Later and Credit Cards be Friends?

For many big brands like Macy’s, why offer the flexibility of four equal, interest-free payments of buy now, pay later (BNPL), when it already offers a private label credit card (PLCC)?


Well, the reality is credit card usage is dropping off, especially with millennials. The younger generation is being taught to avoid debt the stats back it up: Generation Z and millennials represent more than 80% of BNPL transactions. In 2020 that accounted for $20 to $25 billion in the U.S. alone. By 2025, that number is expected to grow to $680 billion globally.


This is why offering both BNPL and credit cards is the way moving forward and here’s why. 


Younger customers prefer BNPL

Millennials are avoiding debt and why nearly two in five specifically use BNPL because they want to avoid paying credit card interest.  

The benefits of BNPL are also attracting older shoppers with 20% of boomers using this new payment option. But with Gen Z making up 40% of all U.S. consumers, you risk ignoring that market without interest-free, buy now, pay later options. 


BNPL shines when the credit card doesn’t 


While credit card use is dropping among the young, about a third of Americans also have poor or fair credit scores and many have no credit at all. This is where BNPL helps millions jumps a major financial hurdle. 


Zip’s BNPL doesn’t require a credit check, but still offers the benefits of financing and does so without burden of interest. That’s why 25% of consumers choose BNPL because it gives them more spending power without a traditional credit check. 


Even if people don’t need financing, BNPL is still proving attractive – 75% of customers use BNPL even when they have the money to cover the purchase.


BNPL drives repeat purchases 


Nearly one in five BNPL shoppers use it every month and 8% use it once a week. A PLCC, on the other hand, can sometimes be a one-and-done for customers who are looking to make an occasional big-ticket purchase like furniture or jewelry.


When BNPL is an option, consumers may opt to make more frequent, smaller purchases. Our retailer partners see an average 80% increase in repeat customers and 60% increase in average order volume after integrating with Zip.


While PLCCs do drive customer loyalty, it comes with the cost of loyalty rewards, discounts and exclusive promotions. BNPL can do the same without those added costs and when a customer uses BNPL from Zip, retailers get the full payment upfront. 


It’s all about having options 


BNPL is still relatively new, especially in Canada, so offering more payment options gives you a first-mover advantage. Research shows two-thirds of millennials expect multiple payment options at checkout and if they aren’t satisfied with the available options, 10% of shoppers will abandon their cart.


By offering BNPL in addition to a PLCC, retailers can further grow customer loyalty, repeat purchases, and sales.

About the author
Spencer Cain

Spencer Cain is a fashion and entertainment editor with a background in ecommerce and trend forecasting. His work has appeared in numerous publications including Us Weekly and StyleCaster, and he spent six years leading US content for ASOS. He believes that online shopping should be an Olympic sport.