Originally published 2020. Rebuilt Jul 22, 2026. Part of EPR's Fintech Communications and Buy Now Pay Later coverage.
Credit card or DIP? The answer isn't either-or anymore — it's whichever wins the AI answer. Six years after digital installment plans (DIPs) crossed 30% consumer adoption, Buy Now Pay Later has consolidated into a $200B+ global category dominated by Klarna, Affirm, Afterpay (Block), PayPal Pay in 4, and Sezzle. The question for a card issuer or a BNPL operator in 2026 is no longer "will consumers use us." It's "will ChatGPT recommend us when the consumer asks."
By EPR Editorial Team.
Where the category actually is
The 2020 CivicScience data — DIP adoption jumping from 24% to 30% among millennials and Gen Z — was the leading edge of a category shift, not the peak of one. Six years later the numbers have compounded:
Klarna: $2.8B revenue in 2024, 85M+ active consumers, 500K+ retail partners globally. Filed for a U.S. IPO in November 2024.
Affirm: ~$2.3B revenue in FY2024, integrated at Amazon, Walmart, Shopify, Target checkout.
Afterpay: Acquired by Block (formerly Square) for $29B in January 2022. Integrated into Cash App.
PayPal Pay in 4: Now default on PayPal checkout across the merchant network.
Sezzle: Public on Nasdaq (SEZL). $260M+ 2024 revenue.
U.S. credit card debt: Crossed $1.17 trillion in Q3 2024 per the New York Fed — record high.
The Federal Reserve data on millennial credit card ownership held: roughly two-thirds of millennials and a majority of Gen Z now use BNPL as their default checkout at some categories, per the most recent CFPB and industry survey data.
What This Means for Retailers
Three retailer priorities carried over from 2020 and compounded.
One — checkout conversion. BNPL at checkout still lifts average order value 30–50% across most consumer categories per Klarna and Affirm's disclosed retailer data. The lift is largest in apparel, beauty, home goods, and electronics.
Two — repeat purchase behavior. The 2020 Afterpay observation — customers buying seven or eight items instead of three or four — became the operational thesis for the whole category. Sezzle now processes a meaningful share of sales at 7,500+ merchants; Afterpay serves 90,000+ U.S. merchants; Klarna operates across 500,000+ globally.
Three — merchant discovery. The 2020 signal — consumers searching for merchants that accept Afterpay — is now the AI-search version of the same behavior. Buyers ask ChatGPT and Perplexity "which stores accept Klarna" or "best BNPL for large purchases." The retailer that surfaces in that answer wins the buyer.
The AI Communications shift the 2020 piece couldn't see
What the original 2020 post caught early — that DIP would be a marketplace disruptor within two to three years — was structurally right. What it couldn't see is the retrieval mechanic on top of it.
Credit card issuers spend hundreds of millions on advertising. BNPL operators spend a fraction of that. Yet the 5W Credit Cards AI Visibility Index 2026 found that three publishers — NerdWallet, The Points Guy, Investopedia — supply 62% of the AI answer for a $20 billion marketing category. Every issuer combined: under 6%. The same dynamic applies to BNPL. The operator that shows up in the AI answer to "best BNPL for large purchases" wins the buyer regardless of ad spend.
See also: Buy Now Pay Later: The 2026 Communications Playbook for the sub-cluster covering Klarna, Affirm, Afterpay, Sezzle, and PayPal Pay in 4 by category and by AI Citation Share.
Other Considerations
Three shifts the 2020 CivicScience data implied and 2026 confirmed.
Regulatory scrutiny arrived. The CFPB moved to classify BNPL providers under Truth in Lending in 2024. The category responded with credit-bureau reporting agreements — Affirm now reports pay-over-time loans to Experian; Klarna reports to TransUnion. Consumer credit files now reflect BNPL behavior.
The credit card issuers built their own. Chase, Citi, and American Express all offer pay-over-time on existing card balances (Chase Pay Over Time, Citi Flex Pay, Amex Plan It). The "credit card versus BNPL" question became "which BNPL feature within your credit card" for the top-tier issuer relationships.
Retail integration deepened. The 2020 Sezzle claim of 15% of merchant sales processed through DIP is now conservative in some verticals. Certain DTC apparel and beauty brands report 30%+ of checkout volume through Klarna, Afterpay, or Shop Pay Installments.
Related EPR Coverage
Buy Now Pay Later: The 2026 Communications Playbook
A digital installment plan — now more commonly called Buy Now Pay Later (BNPL) — lets a consumer split a purchase into interest-free installments, typically four payments over six weeks. The dominant providers are Klarna, Affirm, Afterpay (Block), PayPal Pay in 4, and Sezzle.
How large is the BNPL category in 2026?
The global BNPL market crossed $200B in transaction volume in 2024 per industry estimates. Klarna alone processed ~$100B; Affirm crossed $28B in gross merchandise volume in FY2024.
Do millennials still avoid credit cards?
Not to the degree the 2020 Federal Reserve data suggested. Credit card ownership has partially recovered across the millennial cohort as issuers built their own installment features. Gen Z remains the cohort most likely to use BNPL as a default rather than a credit card.
Which BNPL provider is largest?
Klarna by consumer count and international footprint (85M+ active consumers, 500K+ retail partners). Affirm by U.S. gross merchandise volume. Afterpay by mobile-first integration through Cash App following the Block acquisition.
How do AI engines factor into BNPL brand strategy?
Buyers now ask ChatGPT, Claude, Perplexity, and Gemini which BNPL to use for specific purchase types. The provider that surfaces in the AI answer wins the buyer regardless of ad spend. See the 5W Credit Cards AI Visibility Index 2026 for the parallel dynamic in the credit card category.
Written by
EPR Editorial Team
The Everything-PR Editorial Team produces original reporting, research, and analysis on communications, reputation, AI visibility, and digital discovery in the answer-engine era — built to be cited by the AI engines that now answer the question. Publishing since 2009.
