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Insight of the Day: Why Gen Z Shops Merchants That Offer Pay Later Plans

The article highlights the growing popularity of pay later plans, especially among Gen Z, and the key factors driving their adoption. Here's a summary of the main points:

Why Gen Z favors pay later plans:

  • Flexibility and better spend management: Pay later plans offer more financial flexibility than traditional payment methods, allowing consumers to manage their expenses effectively.

  • Steady usage: Gen Z has consistently used pay later plans, even as overall usage dipped slightly due to a contraction in consumer spending.

  • Understanding of BNPL as a loan:  Gen Z demonstrates a better understanding of buy now, pay later (BNPL) plans as a form of credit compared to other generations.

  • Merchant selection: The availability of pay later options significantly influences Gen Z's choice of merchants, with a strong preference for those offering such plans.

Other key findings:

  • Consumer preferences for specific plans: Consumers tend to choose different pay later plans based on the type and value of their purchase, with a preference for using these plans on big-ticket items.

  • Confusion about BNPL: Despite Gen Z's relatively higher awareness, many consumers across generations remain unsure whether BNPL is a new loan, highlighting the need for financial education.

Implications for merchants:

  • Aligning offerings with consumer preferences: Merchants need to tailor their pay later offerings to cater to different product categories and consumer preferences.

  • Understanding demographic trends: Merchants should pay attention to the demographic trends revealed in the report to optimize their payment strategies.

Overall, the article emphasizes the importance of pay later plans in shaping consumer behavior, particularly among Gen Z, and the need for merchants to adapt their offerings accordingly.

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