Pay Later’s Next Chapter: Why Credit Unions Are Rethinking Installment Payments

Buy now, pay later (BNPL) has rapidly evolved from a niche payment option into a routine part of everyday spending. As installment tools expand across discretionary purchases and household essentials alike, the question for credit unions (CUs) is no longer whether members use Pay Later—it is where they use it. Increasingly, that activity is taking place through third-party providers embedded in merchant checkouts and digital wallets, creating a more fragmented payment experience and shifting activity outside the CU-member relationship.

At the same time, managing multiple installment plans across providers is becoming more complex for consumers. This dynamic creates a clear strategic inflection point: Bring these experiences into the CU ecosystem or risk ceding both engagement and transaction volume. This Tracker examines how the growing complexity of installment payments is reshaping consumer expectations and why credit unions have an opportunity to bring Pay Later solutions closer to home.

• Pay Later Goes Mainstream—But Managing It Is Getting Harder
• Members Want BNPL From Their CUs—But Many Must Look Elsewhere
• CU Pay Later Programs Can Strengthen Trust, Engagement and Financial Wellness
• Seizing the Pay Later Opportunity

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Pay Later Goes Mainstream—But Managing It Is Getting Harder

As installment plans spread across a growing range of purchases, consumers are increasingly juggling multiple repayment schedules at once. This complexity is making BNPL harder to track and manage, even as usage becomes more routine.

This growth reflects a broader shift in how consumers approach spending. BNPL initially gained traction as a means of breaking up large discretionary purchases, such as electronics or furniture, into smaller payments. Over time, however, the model has expanded well beyond those use cases. According to research from PYMNTS Intelligence, consumers now regularly rely on BNPL and card installment plans for travel, home services and events, where flexible payment timing can help consumers manage expenses.

More recently, installment payments have moved into everyday household spending as well. Utilities, medical bills and other recurring or essential expenses are increasingly financed through BNPL tools. This shift signals that installment payments have evolved from a convenient microloan system into a budgeting mechanism that consumers use to smooth out cash flow across a range of financial obligations.

Managing multiple BNPL plans is creating new complexity for consumers.

While traditional credit cards provide a predictable monthly billing cycle, allowing consumers to review purchases and repay balances on a single schedule, BNPL plans operate differently. Each purchase creates its own set of repayment terms, meaning frequent users may be managing multiple installment schedules simultaneously.

This structure can create significant tracking challenges. According to PYMNTS Intelligence, one-quarter of BNPL users report that they are usually or always unsure about their next payment date or how many payments remain in a plan. Roughly half say they struggle to track these details at least occasionally.

As installment payments multiply across different merchants and apps, the burden of managing these plans grows. Consumers may find themselves tracking several repayment schedules across multiple providers, each with different payment intervals and account interfaces. The result is a fragmented experience that can make it harder for users to maintain a clear view of their financial obligations.

For credit unions, this growing complexity highlights an emerging opportunity. With installment payments now a mainstream part of consumer spending, users need tools that provide clearer oversight and simpler management of their BNPL activity.

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Members Want BNPL From Their CUs—But Many Must Look Elsewhere

Interest in BNPL is rising among CU members, particularly younger consumers who now view installment options as a standard payment feature. However, because many CUs do not currently offer these options directly, members often turn to third-party providers to access the flexibility they want.

A growing share of CU members would use BNPL if their institutions offered it.

These consumers are not using BNPL exclusively for large purchases. Nearly 30% of CU members rely on installment plans for everyday purchases ranging from $10 to $30. The ability to split even modest transactions into installments highlights how BNPL is evolving from a financing solution into a flexible budgeting tool embedded in daily commerce.

However, CU members often turn to third-party providers for BNPL services.

Nearly half (49%) of credit union members say they have used BNPL offerings from companies outside their FIs. Among the providers members use most often are PayPal (46%), Affirm (39%) and Klarna (34%), each of which has built strong merchant partnerships and consumer brand recognition. In many cases, members may not even realize that their CUs could offer installment options. Awareness remains limited, particularly as third-party BNPL tools are more prominently embedded within merchant checkout experiences. When consumers encounter these options during the purchasing process, they may adopt them without considering whether similar services exist through their financial institutions.

Bridging this awareness gap will be essential for CUs that want to compete effectively with FinTech providers. By educating members about available installment options and embedding these tools into their own digital experiences, CUs can position themselves as trusted sources of flexible payment solutions while keeping more transactions within their ecosystems.

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CU Pay Later Programs Can Strengthen Trust, Engagement and Financial Wellness

Bringing Pay Later programs in-house allows credit unions to simplify installment management for members while strengthening engagement. At the same time, retaining these transactions within their ecosystems gives institutions greater visibility, competitive control and new opportunities to drive growth.

Bringing BNPL in-house can offer simpler management, stronger guidance and better financial outcomes for CU members.

Credit unions are also uniquely positioned to provide guidance alongside these tools. Their member-focused model enables them to pair BNPL offerings with financial education, alerts and personalized support that encourage responsible usage. When structured thoughtfully, Pay Later programs can function not just as a payment option but also as a budgeting tool, helping members manage cash flow and avoid higher-cost forms of credit.

By embedding installment payments within a trusted financial relationship, credit unions can reduce friction, improve transparency and strengthen members’ overall financial confidence.

Meanwhile, CUs retain BNPL transactions, gain insight and strengthen competitive positioning.

For credit unions themselves, bringing Pay Later capabilities in-house offers strategic advantages that extend beyond member experience. When members rely on third-party BNPL providers, the associated transactions—and the data they generate—occur outside the credit union’s ecosystem. This limits institutional visibility into members’ financial behaviors and reduces opportunities for engagement.

Integrating BNPL directly into the credit union experience allows institutions to retain those transactions and gain deeper insight into how members manage spending, liquidity and repayment over time. As Velera’s Angel Siorek notes, when installment activity moves through external platforms, credit unions lose sight of important aspects of members’ day-to-day financial lives. Bringing those flows back in-house enables a more complete view of member finances and supports more informed decision-making.

There are also competitive implications. As BNPL becomes a standard expectation—particularly among younger members—credit unions that do not offer these options risk ceding both transactions and relationships to FinTech providers. By contrast, institutions that embed Pay Later into their own offerings can strengthen their positions as primary financial providers while creating new opportunities for engagement, cross-selling and long-term growth.

Modern implementation approaches further support this shift. By integrating BNPL solutions into existing core and digital systems, credit unions can maintain control over underwriting criteria and risk policies as well as member experience.

As the Pay Later market continues to expand, the strategic question for credit unions is not whether to participate, but whether they will do so within their own ecosystems or allow third-party providers to define the member relationship.

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Seizing the Pay Later Opportunity

As installment payments become a routine part of everyday spending, CUs face a growing opportunity to meet members where they already are. By offering BNPL tools within their own digital ecosystems, institutions can simplify payment management while strengthening engagement, visibility and trust.

PYMNTS Intelligence offers the following actionable roadmap for CUs exploring BNPL solutions:

• Keep BNPL transactions within the CU environment. When installment payments occur through the CU’s channels, institutions gain better insight into member behavior and can offer more relevant, timely financial guidance.
• Integrate BNPL directly into digital banking platforms. Embedding installment options within mobile and online banking environments allows members to manage payments alongside their existing accounts, creating a more centralized experience.
• Educate members about in-house BNPL options. Many members rely on third-party BNPL providers because they are unaware that alternatives exist through their CUs. Clear communication and in-app messaging can help close this awareness gap.
• Design installment programs around financial wellness. Emphasizing transparent terms and structured repayment schedules can help members track and manage installment activity more effectively.

BNPL is already part of how members pay. For credit unions, the priority now is ensuring those payments happen within their own experience—not somewhere else.

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