How BNPL is transforming financial inclusion

March 17, 2025

New challenges and ways of working are reshaping consumers’ spending patterns and credit needs. Rising costs and inflation have squeezed household incomes. Millions of people are shut out of conventional credit options simply because they lack a credit history or a specific score.

Although installment payments have existed for over a century, short-term financing offered by buy now, pay later (BNPL) providers like Zip bridge critical gaps in financial access, ensuring responsible, flexible spending options.

With approximately 380 million global users—expected to reach 670 million by 2028—BNPL reflects a fundamental evolution in consumer preferences. Tired of complicated terms, unexpected fees, and excessive interest rates, millennial and Gen-Z consumers are leaving credit cards behind, preferring the simplicity and transparency offered by BNPL. For merchants, BNPL has emerged as a direct path to reach this growing demographic of digital-first shoppers, while working to improve conversion rates.

Democratizing financial access

While conventional credit systems rely on credit bureau scores, BNPL providers like Zip leverage alternative data points to reach the shoppers shut out by these systems. BNPL helps merchants engage a high-intent audience that traditional credit often ignores. By focusing on short-term, one-time, low-limit loans, Zip ensures responsible underwriting. This allows consumers to manage short-term expenses.

Shoppers can’t always wait the days or weeks typically associated with credit card approval—paying through Zip provides immediate, flexible installment payments for needed purchases and ensures businesses can convert browsers into buyers, reducing cart abandonment and lost sales.

A responsible alternative to traditional credit

BNPL presents a transparent, user-friendly alternative to the high-interest and predatory lending practices of credit cards. The flexible, short-term installment payments offered by providers like Zip are transparent, easy to understand, and contain no hidden fees.

Because real life doesn’t always align with due dates, Zip offers payment date changes. This flexibility is more than just a feature—it helps consumers avoid late fees and align payments with their pay schedules.

Zip also incentivizes smart and sustainable purchasing. Users who pay off a streak of five orders on time or early earn increased spending power. That’s one reason why 35% of all Zip purchases were repaid early in 2024¹.

Sustainable business growth

For forward-thinking merchants, BNPL represents more than a shopper-attraction tactic — it's a catalyst to empower financially underserved customers and achieve sustainable growth. By offering flexible installment payments across all channels, merchants can capture sales that might otherwise be lost to price sensitivity, lack of credit options, or failure to meet customers in every place they shop.

But the real power of BNPL lies in its ability to transform one-time convenience shoppers into returning loyal customers. With a +20% lift in conversion rates and a 46% increase in AOV², BNPL proves to be a powerful tool for revenue optimization. When customers know they can access flexible payment options, they are more likely to return and recommend a business to others, fueling a loyalty loop that strengthens customer lifetime value. With $334 billion in transaction value in 2024—a figure projected to reach $687 billion in 2028—BNPL represents a game-changing opportunity merchants can’t afford to miss.

Zip’s commitment to responsible lending

Zip's commitment to responsible financing goes beyond accessibility; it promotes financial health for both consumers and merchants. Our proprietary underwriting capabilities help us reach customers who don’t have access to traditional credit, while safeguards like low credit limits and payment date changes prevent customers from taking on long-term debt.

As the BNPL industry evolves, Zip remains committed to setting new standards for responsible financing and balancing commercial success with corporate social responsibility. Adopting BNPL fosters a more inclusive and sustainable financial ecosystem, connecting merchants with millions of new customers and unlocking billions in potential revenue.

¹_{35% of all Zip purchases were repaid early in 2024:}_{Zip internal data as of January 2025}

²_{+20% lift in conversion rates:}_{Zip internal data as of February 2025;}_{46% increase in AOV:}_{Zip internal data as of May 2024.}_{Results are not representative, or guaranteed and may vary based on industry, company size and other criteria.}