BNPL on the Rise: More than a third of Australians using Buy Now Pay Later for online payments up 11% YoY
Gen Z leading the shift away from credit cards as PayPal Pay in 4 gains popularity
Sydney, 11 December 2025: New research from the PayPal eCommerce Index 2025 shows Australians – particularly Gen Z – are moving away from credit cards and embracing Buy Now Pay Later (BNPL) for online payments with PayPal Pay in 41 leading BNPL providers in terms of year-on-year growth.
The national study of 1,022 Australians aged 18-75 found that more than one-in-three Australians (37%) used BNPL for online purchases in the past six months – an increase of 11% from 26% the previous year. Over half of all BNPL users (51%) now use PayPal Pay in 4 - up from 45% the previous year - making it one of the most popular BNPL services in Australia and representing 13% year-on-year customer growth.
Gen Z driving the BNPL shift
While Millennials are the biggest users of BNPL for online purchases (53%), Gen Z is leading the behavioural change. For the first time, more Gen Z Australians used BNPL (38%) than credit cards (32%) for online purchases – making them the only generation to prefer BNPL over traditional credit. However, the gap is narrowing for Millennials too, with 53% using BNPL compared to 54% who used credit cards online in the last 6 months.
Gen Z also leads on spend per BNPL transaction, averaging $111, ahead of Millennials ($102), Gen X ($99), and Boomers ($93). They also make frequent BNPL purchases, averaging 3.1 BNPL transactions per month compared to an average of 2.9 across other generations.
This combination of high adoption, frequent use and larger spend per purchase underscores Gen Z as the leading drivers behind Australia’s BNPL growth. Despite this shift, debit cards remain the dominant online payment method for Gen Z, with 81% paying this way in the last six months – underscoring their preference to avoid credit cards in favour of BNPL and debit.
“Gen Z are reshaping how Australians pay online. They want greater control over how they spend and manage credit, and that’s why flexible, transparent options like BNPL resonate so strongly. PayPal Pay in 4, with no late fees or interest, is meeting this demand and supporting their shift towards smarter ways to pay,” said Andrew Toon, General Manager of PayPal Australia’s payments business.
PayPal Pay in 4 surges in popularity
Australians report using BNPL to better manage cash flow and avoid interest charges.
- 65% of BNPL users say they use it to spread out the cost of larger purchases
- 51% use it to manage cost-of-living pressures
- 51% believe it helps them manage their budget and cashflow
- 48% say it provides more flexibility than other forms of credit, and
- 42% say it’s easier to make repayments than other forms of credit.
Against this backdrop, PayPal Pay in 4 continues to grow rapidly with 48% of BNPL users saying they switched to PayPal Pay in 4 because it charges no late fees – with Gen X (53%) and Millennials (52%) citing this most often.
For online businesses, the research indicates that offering PayPal Pay in 4 has significant impact: Australians are more than twice as likely to purchase on a website that offers PayPal Pay in 4 than one that does not (116% uplift in likelihood). Overall, regardless of provider, Australians are 82% more likely to purchase from a site offering BNPL than one that doesn’t.
“BNPL use in Australia is growing strongly, driven not just by popularity but by the practical financial support it offers during this time of high living costs. PayPal Pay in 4, now chosen by more than half of Australia’s BNPL users, has surged to become the second most-used BNPL service. With no late fees or interest, PayPal Pay in 4 gives Australians the flexibility and confidence to manage larger purchases,” concluded Toon.
ENDS
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1 PayPal Pay in 4 is a continuing credit contract provided by PayPal Credit Pty Limited (ABN 66 600 629 258; Australian Credit License 568848) to Australian residents and is subject to eligibility criteria, credit application and suitability assessment. PayPal Pay in 4 is available on eligible transactions under AU$2,000 and application and use may impact a customer's credit score. For full terms and eligibility criteria, see website.
About the PayPal eCommerce Index 2025
The PayPal eCommerce Index 2025 surveyed 1,022 Australians aged 18–75 and 413 business decision-makers. Conducted by Fifth Quadrant and commissioned by PayPal Australia, the study explores consumer and business trends in online payments, social commerce, security, and Buy Now Pay Later.
PayPal has been revolutionizing commerce globally for more than 25 years. Creating innovative experiences that make moving money, selling, and shopping simple, personalized, and secure, PayPal empowers consumers and businesses in approximately 200 markets to join and thrive in the global economy. For more information, visithttps://www.paypal.com, https://about.pypl.com/ and https://investor.pypl.com/.
PayPal Australia was established in 2005 and has more than 9.5 million active Australian customer accounts. PayPal enables Australian consumers and businesses to easily and securely send, receive, and manage their money. The PayPal service is provided by PayPal Australia Pty Limited (ABN 93 111 195 389) which holds an Australian Financial Services Licence number 304962. PayPal credit services are provided by PayPal Credit Pty Limited (ACN 600 629 258) which holds Australian Credit Licence 568848. For more information visit PayPal Australia Newsroom for more information and follow us on Instagram or Facebook.
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