Gen Z, Millennials and COVID fueling rise in hybrid credit card alternatives

Fintech companies like Klarna, Affirm and Afterpay keep growing users of their installment payment plans, aided by younger generations' iffy relationship with credit cards. Traditional consumer lenders are finding ways to meet this demand in order to retain their competitive positions.

Younger consumers, less enthralled with using traditional credit cards and their ensuing debt, are adding drive to the point-of-sale financing trend. More and more variations on the “buy now, pay later” way of buying things keep rolling out.

Fintech lenders are the major drivers, but traditional consumer lenders have ramped up their efforts as the competitive risk of not doing so grows.

Trends that were already in motion have been given a big push by COVID-19, as the pandemic drove more consumers than ever to online and mobile purchasing channels. POS financing is available for both in-store and digital purchases, and is both a payments mechanism as well as a form of financing.

Ways for consumers to use this new form of payment and financing depend on the provider and include direct access at the point of sale, often via a fintech app or a button on a retailer’s app or on its checkout screen; the choice to switch a credit card purchase to an installment plan after purchase; and access to a platform that connects consumers, seller and financing providers.


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