Why Card-Based BNPL Is Poised to Become the Mainstream Pay-Later Channel

By Steve Cocheo, Senior Executive Editor at The Financial Brand

Published on July 9th, 2026 in Payments

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The banking industry’s role in buy now, pay later is shaping up to become a bigger factor in this growing part of the consumer credit business.

Consumers’ affordability challenges, trust in traditional credit sources, and people’s attachment to card-based rewards and product protection are all boosting card-based buy now, pay later options.

The new factor: Beyond credit cards, there has been ongoing adoption of BNPL programs on debit cards. One accelerant is the fledgling “Affirm Edge” program, in which Affirm, one of the leading nonbank BNPL providers, will be partnering with banks and credit unions to offer Affirm pay later programs through their banking apps.

Another factor: AI-assisted pay later recommendations, according to recent research by PYMNTS Intelligence.

Key indicator: JPMorgan Chase’s consumer bank revealed in its 2025 annual report that it has seen “strong customer adoption across our range of Pay Over Time solutions.” Specifically, since the bank started rolling these out on both the credit and debit side, 6 million customers have engaged in payment plans for $10.8 billion, as of the publication of the annual report.

Another key indicator: A survey of over 2,000 consumers by PYMNTS, sponsored by Splitit, found that 36% had used card-linked installment payment programs in the previous three months, while only 12% used fintech BNPL programs. (Splitit offers its own variation on card-based plans.)

Need to Know:

In early June, Bank of America rolled out its new Custom Plan option, which will allow BofA card holders to set up repayment plans for credit card charges.
JD Power’s 2026 U.S. Buy Now Pay Later Satisfaction study identified BNPL as the fastest-growing payment method the firm studies. JD Power also found that consumers’ satisfaction with bank-based pay later plans was higher than satisfaction with fintechs. However, fintech programs had an overwhelming lead in terms of usage, according to the study.
Fintechs may cross over into banking’s side of the fence. In January, Affirm applied for an industrial bank charter in Nevada, which would carry federal deposit insurance, offering a direct funding option. In June, Klarna applied for an industrial bank charter in Utah. The Trump administration has treated such moves favorably.

Half of Major Card Issuers Now Offer Installment Options

With BofA’s entry into the competition, half of the major card issuers that Keynova Group studies now offer a pay later option or options in connection with their cards, according to Beth Robertson, managing director.

“While these plans lack the immediacy of enabling BNPL at the point of sale, cardholders are becoming more astute about launching BNPL from their digital credit card pages, as needed, to manage their cash flow,” according to Keynova’s report. Earlier this year U.S. Bank introduced Split, a card that immediately puts charges over $100 into payment plans.

Why bank plans look promising: Robertson recently analyzed card issuers’ BNPL programs as part of Keynova’s Online Credit Card Scorecard report. Right now, she says, having this option appeals to many consumers’ need to find affordable ways to manage their finances in the face of inflation.

This is in context with other card program features addressing affordability. For example, most issuers are again offering 0% introductory offers to persuade cardholders to switch to their cards. And three out of five major issuers now offer secured credit card options, to help consumers work towards unsecured card status.

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Bank Plan Features Could Help Them Pull Ahead

However, Robertson sees growing appeal for card-based pay later options as more consumers’ providers offer them. Among her reasons:

• Rewards. People who have cards often participate in rewards programs of some kind. Putting a major purchase on a card and then shifting that charge into a repayment plan generally allows the purchaser to hold onto their rewards, she says. Going with a fintech BNPL offer doesn’t provide those benefits in the consumer’s accustomed program.

“Many people like to consolidate most purchases on a preferred reward earner card,” says Robertson, “and wouldn’t you want your big expenses to go on that card?”

• Buyer protection programs. Keeping major purchases on a card that offers some measure of buyer protection provides some assurance that fintech programs don’t offer, according to Robertson.

• No new credit approval. At the point of sale, consumers have to be approved by the BNPL provider for each purchase, Robertson points out. If they have a credit card with an established credit limit, they know where they stand and don’t have to await separate credit approval.

“The credit limit is probably larger than what you would get from a fintech offer at the point of sale,” says Robertson.

She adds that being able to break up a purchase into installments after the fact gives card holders a flexibility that adopting a plan at checkout doesn’t.

The kicker: Robertson notes that she’s found in her research and experimentation that bank plans sometimes give first-time users of card-based pay later a break, such as charging no fee for a payment plan.

Get Ready for AI to Enter the Fray

The range of options for paying for things keeps growing, and the population of providers in each option category grows too. Managing new purchases on top of what a consumer already owes is a challenge.

This is one of the main drivers of adoption of AI by consumers for managing charges and debt, according to the PYMNTS study. The study indicates that three out of five consumers would let AI recommend pay later options, and the appeal is even higher among Gen Z (80%) and Millennials (78%). In general, the study found, younger generations favor AI for payment activities, with older generations generally not liking the idea so much.

The younger generations “are forming AI-first financial habits now, during early adulthood, and those habits are likely to persist as they move into more complex financial life stages, including major purchases, home buying, partnering and eventual retirement,” the study said.

Among the tasks that a significant share of younger generations favor using AI for in this context is choosing among BNPL options for a given purchase, tracking BNPL debt among multiple providers, and monitoring the impact of choosing a pay later option on their credit score.

Key insight: Younger generations like the ability to use AI as a tool, but they aren’t willing to hand AI the key to final decisions.

“Even consumers who are open to AI-driven Pay Later are not ready to hand over control,” the study said. Backers of agentic payments that take place in the background need to take note.

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Affirm Aims to Partner with Banks and Credit Unions

Offering BNPL in conjunction with a debit card is not a new concept at Affirm. It has been offering its own debit card, currently via banking as a service arrangements, for some time, and that product includes the option to switch a purchase into a plan. But what is new in its Affirm Edge effort is partnering up front with banks and credit unions to serve their customers. (Officials said that Affirm assumes the credit risk of charges put into payment plans.)

Key insight: Affirm believes this gambit could put its own plan volume on steroids. In an investor day forum, officials estimated that the country’s 130 million debit-first consumers represent an addressable volume opportunity of roughly $140 billion.

But what’s the appeal for the traditional players? During Affirm’s investor forum, an officer of one of the company’s signups addressed that.

Phil Lehner, president of consumer lending at Old National Bank, with $72.6 billion in assets, told analysts that giving customers the option to put a charge into a plan would help give the bank “top of wallet” status. He noted that thousands of Old National customers had already been using other providers’ payment plans.

“It moves [our card] from just transactional to strategic,” said Lehner. “Customers are not only going to use debit cards for those short everyday basic purchases, but think about the longer-term purchase or the more strategic pre-planned purchases.”

Lehner believes this added functionality will make the bank’s debit card more of a do-all card. “Everything is integrated into our mobile app, into our ecosystem,” he said. “So customers don’t have to worry about going to a third party or a different app to do their transactions.”