NEW YORK--A new report from PYMNTS Intelligence and Velera suggests installment payments are rapidly becoming a core expectation among younger consumers, putting added pressure on credit unions to offer buy now, pay later options directly within their digital banking platforms.
The report, “Pay Later’s Next Chapter: Why Credit Unions Are Rethinking Installment Payments,” found installment payment value increased 22% year over year alongside rising transaction volume, signaling broader adoption across categories that now include travel, services and recurring expenses.
Researchers said Gen Z consumers increasingly view installment payments not as an alternative financing tool, but as a standard payment method. According to the study, 70% of Gen Z consumers said they would use BNPL services if offered by their primary financial institution, reflecting growing demand for predictable repayment schedules and fixed payment structures over revolving credit balances.
The report warned that when installment activity occurs outside a credit union’s ecosystem, institutions risk losing both transaction volume and visibility into member spending behavior. PYMNTS Intelligence and Velera said integrating installment options into digital banking platforms could strengthen engagement by allowing members to manage repayment activity alongside traditional banking functions in a single interface.
While 38% of credit union members surveyed said they would likely use BNPL options offered directly by their financial institution, many credit unions have yet to deploy such capabilities at scale, leaving third-party fintech providers to dominate the space through merchant checkout integrations and digital wallets.