Here's Why Filipino Gen Zs are Choosing Buy Now, Pay Later Over Credit Cards
More and more users are turning to digital payment platforms not just to manage their funds, but also because of the availability of various loan services.
Case in point: the "buy now, pay later" (BNPL) service. This microloan is emerging as a cheaper and more accessible alternative to traditional credit cards, especially among younger consumers.
According to TransUnion's latest Consumer Pulse survey, majority (81 percent) of Generation Z (aged 18 to 26) are familiar with the buy now, pay later (BNPL) scheme. 65 percent of the users have made at least one BNPL transaction in the past year, up from 57 percent in the first quarter of 2023. The increase is said to be the biggest across generations.
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One reason Gen Z consumers are particularly drawn to the buy now, pay later scheme is because it’s much easier to apply for payment plans. Other reasons users cited include wanting to try the service (17 percent); spreading payments over time (11 percent); and having an alternative to afford a larger purchase (11 percent).
“For many Filipinos, buy now, pay later services offer financial convenience and flexibility by letting them tailor their payment terms to best suit their needs and preferences,” said Weihan Sun, TransUnion’s Principal of Research and Consulting for Asia Pacific.
The study highlighted the need for businesses and other players in the formal financial sector “to develop robust underwriting systems to efficiently cater to the expectations of an increasingly digital savvy demographic.”
In 2022, a study by global research firm PYMNTS projected buy now, pay later services to expand until 2027, with growing preference among younger people. One factor said to be driving this attraction is that many of these consumers watched their parents struggle with credit card debt during the 2008 economic recession. For them, the BNPL scheme might be the “safer” option.
Buy now, pay later services let consumers split their purchases into multiple payments to be paid back over time—allowing them to shop worry-free, even when short on funds. Compared to credit cards, these microloans often come with little to no interest, as well as higher chances of approval. However, like any lending service, borrowers are subject to late fees or penalties if they miss a payment.
Among the most popular buy now, pay later platforms in the Philippines are BillEase, TendoPay, Cashalo PayLater, LazPayLater, Shopee SPayLater, and Home Credit.
