A new report from PYMNTS Intelligence, a data-driven insights organization, and Splitit, a global leader in card-linked installment payments, reveals how artificial intelligence is shaping pay later decisions at checkout and across emerging commerce channels. The company’s report, titled “The Pay Later Ecosystem Report: Consumers Will Let AI Recommend Pay Later, But They Want Control,” found that 61 percent of U.S. consumers surveyed would allow an AI shopping assistant to recommend a pay later option for at least one common purchase category. Among Gen Z consumers, that figure climbs to 80 percent.
The company said that openness comes with clear conditions: consumers want control, transparency and the final say. The findings also challenge some of the assumptions that have driven the rapid growth of traditional buy now, pay later (BNPL) products. Consumers increasingly favor solutions that leverage existing credit relationships rather than require them to establish new ones.
“Our research makes it clear that consumer trust in AI-assisted commerce is real but conditional,” said Karen Webster, CEO of PYMNTS. “People are open to AI guidance, as long as they control the final decision. That distinction matters enormously for anyone building payment products, commerce platforms or AI shopping tools. The companies that succeed will be the ones that use AI to simplify decisions rather than replace them.”
According to the findings, 28 percent of consumers said approval before purchase would make them more likely to trust recommendations from AI tools related to pay later options. Just 2 percent want full automation. The preferred model is guided choice, in which shoppers can review, modify, approve or reject a recommendation before making any commitment, the report said.
Fifty-nine percent of consumers cited credit score protection as essential when evaluating pay later options. That ranked as the top consumer priority for AI-selected pay later solutions, ahead of the lowest total cost, the most affordable monthly payment and avoiding the opening of a new loan.
Twenty-four percent of consumers said their top priority is finding the lowest-cost extended payment option, compared with 18 percent who prioritize credit card rewards programs. When it comes to preferred pay later formats, credit card installments outpaced traditional BNPL by a margin of 3-to-1: 36 percent used card-linked installments in the past three months, while only 12 percent used standalone BNPL products.
Gen Z consumers place greater emphasis on budgeting assistance and credit monitoring, while older consumers use AI for those same tasks at lower rates and are more likely to reject AI involvement altogether. Generation predicts AI use for pay later more strongly than income, with a 15-point spread across age cohorts compared with a 4-point spread across income brackets.
Sixty-four percent of Baby Boomers and 40 percent of Gen X consumers said they would not be open to AI choosing a pay later option in any category, compared with 20 percent of Gen Z consumers and 22 percent of Millennials. Gen Z consumers are more comfortable with AI participating in the decision-making process but still expect a human checkpoint before making any commitment.
For merchants, the data suggest that payment flexibility is becoming one of the most important drivers of conversion in commerce. As commerce becomes more distributed across mobile, in-store, social and AI-driven channels, merchants that enable shoppers to use the credit they already have may be best positioned to convert demand into completed transactions while maintaining ownership of the customer relationship.
For issuers, the findings reinforce the strategic value of installment products built directly into existing credit card relationships. Rather than ceding customer engagement to third-party lending platforms, issuers can deliver the flexibility consumers want while strengthening loyalty, engagement and card utilization.
The report states that as AI-powered systems begin helping consumers shop, compare products and eventually transact on their behalf, the payment infrastructure supporting those experiences will face the same consumer expectations revealed in the research: no new credit decisions, no application friction and no unnecessary interruptions.
