Skeptics often view Buy Now Pay Later (BNPL) as a debt risk, but South African consumers use it as a sophisticated budgeting strategy. In the below article, Payflex CMO Tracey-Lee Zürcher-Campbell debunks 5 myths about how local consumers and merchants use BNPL.
Says Payflex CMO Tracey-Lee Zürcher-Campbell, “With 41% of respondents to TransUnion’s Q1 2026 Consumer Pulse Study indicating that they have used Buy Now, Pay Later (BNPL) services in the past year, the popularity and growth of BNPL among consumers is not in dispute. However, there are still fundamental misunderstandings about how local consumers and merchants use BNPL.”
She debunks five of these myths here:
Myth #1. BNPL is used by South Africans who are already overextended
Reality: Responsible BNPL can operate as a budgeting tool that helps consumers manage cash flow and short-term pressures without taking on additional credit interest repayments, says Zürcher-Campbell.
South African credit card interest rates can exceed 20%, depending on the individual’s risk profile and product terms. Personal loan pricing may also be significantly higher once initiation fees and other credit costs are taken into account.
“By contrast, BNPL attracts customers who would not ordinarily have bought at all on a standard credit product, because it allows them to pay for their items in manageable chunks, interest free,” she continues.
Transunion’s researchers found that among consumers “there is a clear awareness of the need to avoid overextension”.
“In addition, BNPL providers vet customers before offering them a facility, to make sure they have a good track record and can pay back; it’s not offered to all who apply,” Zürcher-Campbell clarifies.
Myth #2. BNPL works for all retail and service categories
BNPL purchases popularity is not distributed evenly across all existing goods and services. For instance, electronics are one of the leading BNPL categories globally, with 25% of users saying it is their primary BNPL purchase category in 2025. This category’s position at the top of BNPL consumers’ agenda is not accidental, given the price tags for electronics today. Fashion/apparel also remains one of the dominant segments globally. About 67% of users are making at least one clothing-related BNPL purchase a year. These two categories (fashion and electronics) are topping BNPL charts, typically followed by bulk grocery purchases, home goods and appliances.
Reality: BNPL works best for discretionary purchases where it supports budgeting and cash flow, while maintaining a responsible approach for customers.
“We are intentional about where Payflex is positioned, particularly in categories like everyday essentials, where there is a greater need to protect customers from over-indebtedness. If BNPL is being used to fund essential spending, it can be a sign of financial pressure, and our priority is to ensure responsible use and avoid adding further strain,” says Zürcher-Campbell.
Myth #3. BNPL relies on consumer defaults to be profitable
Reality: Responsible BNPL providers focus on the lifetime value of a consumer to the merchant and rely on repeat business. Late fees are intended to encourage prompt repayment rather than serve as a revenue stream, Zürcher-Campbell explains.
“Ideal BNPL customers make frequent purchases using BNPL, that they pay off within the agreed period. This enhances long-term value for merchants and consumers alike,” she says.
“BNPL allows consumers to spread the cost over time, which means they can comfortably commit to two, three or four structured repayments. This makes them less likely to default.”
In addition, defaulting customers are not able to make further purchases.
Myth # 4. BNPL is too expensive for local merchants
Reality: While the processing cost for BNPL payments are marginally higher than other tender types, BNPL enables sales that might not otherwise happen.
“Ultimately, a solid BNPL strategy supports a merchant’s bottom line by providing consumers with flexible payment options. This encourages them to either spend more in one purchase, or purchase more frequently,” Zürcher-Campbell says.
Myth #5. Only younger generations use BNPL
The reality: True, BNPL is popular among Millennials and Gen Z, because they are more financially savvy, and do not want to take on traditional credit. They experienced the effects of both the sub-prime crisis in 2008 and the pandemic recession and want to avoid similar situations.
It is also true that most responsible BNPL providers do not allow people over the age of 65 to make use of their services.
However, BNPL is widely used among most economically active age groups, particularly for financing furniture or larger life-event purchases.
“Ultimately, BNPL in South Africa has shifted from a niche alternative to a mainstream financial tactic,” concludes Zürcher-Campbell. “Consumers use it to protect their monthly cash flow, and merchants use it to increase sales. In the process, BNPL has become a data-driven driver of sustainable retail growth.”
The popularity of BNPL services across all age groups is growing not only in South Africa, but also across the globe. For instance, in the UK almost 20% of over-65-year-olds used short-term loan products or intended to do so in 2023. That almost doubled less than 10% reported as of 2022, as many people, irrespective of their age, struggled with shrinking budgets affected by high inflation levels at the time.
Today, the situation hasn’t changed much in the UK: 73% of Millennials have used BNPL; 65% of Gen Z; 51% of Gen X, and 29% of Baby Boomers. So, the usage of this alternative payment method is high across all age groups.
As for gender distinctions, men currently use BNPL slightly more than women globally. Namely, BNPL payments have 53% male users vs. 46% female users according to aggregated 2025 consumer finance datasets summarized by industry researchers.
