PayPal (PYPL) continues lead the buy now, pay later (BNPL) space among American teens, according to Piper Sandler's fall 2021 "Taking Stock with Teens" survey.
PayPal was the top choice for teens who were interested in splitting payments.
The 42nd semi-annual survey conducted between August 17 and September 16 looked at responses from 10,000 teens across 44 U.S. states, the average age being 15.8.
"We think PayPal’s leading position with teens for payments and buy now pay later sets the stage for future growth in active users and payment volume," the report stated.
BNPL operators generally allow users to defer payments on products from electronics to apparel by splitting it into four. Splitting payments — as opposed to bulk purchases on credit cards that would accrue interest until being paid — is built on the premise that there is a “shift away from credit to debit,” according to Afterpay co-founder Nicholas Molnar.
PayPal's BNPL offering, which was formally announced in August 2020, allows consumers to pay for purchases in four parts over a six-week period. Users pay no fees or interest.
Australian startup Afterpay and Swedish Klarna follow closely behind PayPal with penetration rates at 32% and 18%, followed by traditional operator American Express.
Big moves are happening in the BNPL space as interest ticks up among American consumers: In August, Square (SQ) announced a giant $29 billion deal to buy the Australian BNPL operator. Amazon (AMZN) also entered the space by partnering with Affirm (AFRM), an American player. Mastercard (MA) also announced its entry in late September.
As more established companies like Mastercard get into this space, "we do expect that buy now, pay later will become ubiquitous, just given the utility that it's demonstrated over the last year or so," Mark Palmer, an analyst at BTIG, said in a previous interview with Yahoo Finance. "I believe it's inevitable that ubiquity is the endgame... what we're seeing now is just another step in that direction."
PayPal also took the lead when it came to peer-to-peer payments: PayPal's Venmo was also the top app for payments for teenagers.
"Venmo’s 41% penetration rate was complemented by the 33% penetration of PayPal Mobile Cash," the report stated.
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Aarthi is a reporter for Yahoo Finance. She can be reached at [email protected]. Follow her on Twitter @aarthiswami.
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