US Mobile Phone Financing: What Industry Experts Won't Tell You About BNPL and Installments

Introduction

The sustained rise in device prices and the shift from subsidy-era pricing to persistent consumer financing have made installment plans and buy-now-pay-later (BNPL) options central to the U.S. handset market. This report synthesizes observed adoption patterns from 2022–2025 and provides scenario-based projections to 2026, with implications for carriers, retailers, manufacturers and financial partners.

1.Market Size Quantification and Segmentation Analysis (2022-2025)

Definition and scope: For this analysis, "mobile phone financing market" denotes the total retail value of U.S. mobile devices purchased through structured financing arrangements (carrier installment plans, device-payment plans, and third-party BNPL programs) in a given year. It excludes recurring service-plan revenue and wearables/accessory-only financing.

Market-size model (summary): Using public signals — U.S. smartphone retail revenues, reported carrier device-payment portfolios, and BNPL adoption trends from market research firms — a modeled estimate places the U.S. financed-device market in the following ranges (total financed device value):

Year	Estimated Financed Device Market (USD)	Carrier Installments %	Third‑party BNPL %
2022	$18–$22 billion	~70–78%	~10–18%
2023	$20–$25 billion	~68–75%	~12–20%
2024	$22–$28 billion	~65–72%	~15–24%
2025	$24–$32 billion	~62–70%	~18–28%

Notes and assumptions: these figures are modeled estimates, combining public carrier statements (device-financing receivables disclosed in investor filings), BNPL transaction share trends (PYMNTS, PYMNTS), and smartphone retail revenue trends (Statista, Counterpoint Research). Carriers have historically originated the majority of device financing; third-party BNPL has expanded but remains a minority share by financed-dollar volume through 2025.

Segmentation by device price tier and demographics:

Premium devices (>$800): represent the largest financed-dollar share despite lower unit share. Financing penetration among premium buyers is highest, often exceeding 50–70% of purchases, driven by flagship launches (iPhone, Galaxy S/Note/Z series) and trade‑in offsets.
Mid-tier ($400–$799): sees broad financing adoption (~30–50% of purchases), particularly among younger buyers and those trading up from budget models.
Budget (<$400): financing adoption is lower on a percentage basis (10–30%) but important at scale for value shoppers using low-cost BNPL options and retailer credit.

Demographic patterns: younger cohorts (18–34) show higher relative BNPL use and third‑party checkout adoption; middle-income households (annual income $35k–$100k) account for the largest share of financed purchases because they combine device needs with limited lump-sum capacity. Urban and suburban markets skew toward carrier installment adoption, while rural consumers rely more on retailer credit and promotional deferred‑payment offers.

2.Adoption Rate Analysis Across Major Carriers, Retailers, and Demographic Segments

Carrier financing landscape (Verizon, AT&T, T-Mobile):

Carriers continue to control the majority of financed-device volume. Based on carrier disclosures and industry reporting, a modeled split of financed-device activations by carrier indicates rough parity with market share: Verizon ~34–40%, AT&T ~28–34%, T‑Mobile ~26–32% of financed-dollar activity.
Differences reflect each carrier’s device portfolio, promotional cadence, and subsidies for trade‑ins. Verizon’s large postpaid base and high average revenue per user (ARPU) tends to elevate its financed-dollar share; T‑Mobile’s Un‑carrier promotions and more aggressive trade‑in programs have widened its unit-financing growth.
Carriers’ device-payment programs (e.g., Verizon Device Payment, AT&T’s installment offers, T‑Mobile Equipment Installment Plan) remain the default financing funnel for postpaid upgrades and in-store device purchases; their scale limits third‑party penetration for device purchases occurring in carrier channels.

Retailer and manufacturer financing:

Apple: The iPhone Upgrade Program and Apple Financing (via Apple Card Monthly Installments/Goldman Sachs partnership) capture a meaningful share of iPhone buyers who prefer direct-device financing and programmatic upgrades. Reported participation for iPhone buyers varies by quarter; Apple’s financing flows are concentrated in higher-dollar devices and Apple Store sales.
Samsung: Samsung Financing and trade-in programs (often via Affirm or internal options) are common for flagship Galaxy purchases and promotions tied to carrier activations.
Big-box and retail: Best Buy, Walmart, and Target offer a mix of store credit, third-party BNPL (Affirm, Klarna) and promotional vendor financing; Best Buy is a notable originator of financed device sales due to its high device mix and Geek Squad financing products.
Online marketplaces (Amazon, e-tailers) increasingly surface BNPL on product pages; Amazon’s past Affirm integration and periodic installment options increase BNPL device buys, especially among digital-first shoppers.

Adoption by channel (summary):

Carrier retail and online channels: majority of financed dollars, especially for flagship and mid-tier devices.
Manufacturer direct (Apple/Samsung): outsized share of premium device financing.
Retailers and marketplaces: important for off-contract or unlocked sales and for value devices where BNPL is attractive.

3.Growth Drivers and Barriers Analysis: Pandemic Effects, Inflation, and Promotional Strategies

Post-pandemic consumer behavior and macro drivers:

Remote work, hybrid schooling and increased mobile-first consumption permanently raised household reliance on smartphones for productivity, education and entertainment — supporting replacement demand and incentivizing financing when budgets are constrained. Device price inflation (higher average selling prices driven by premium model features and 5G-capable radios) increased absolute financed-dollar volumes as buyers opt for monthly payments over upfront cash. Sources: Statista, carrier investor relations and industry analyses (Counterpoint Research).

Promotional strategies accelerating financing adoption:

Zero‑interest or low-interest carrier installment offers, often coupled with trade‑in credits, lower effective cost and push customers into multiyear payment arrangements.
Bundling (device financing + service plan discounts) reduces perceived monthly cost and increases loyalty; carriers have used this extensively to justify device-payment programs.
Retail BNPL marketing (instant approval messaging, flexible terms, no-interest windows) attracts younger and credit‑constrained buyers who prioritize convenience and speed at checkout.

Barriers and risks:

Regulatory and compliance risks: growing scrutiny of BNPL by U.S. regulators (FTC, CFPB) raises potential for increased disclosure requirements, underwriting expectations and consumer-protection rules that could raise origination costs for BNPL providers (CFPB, FTC reporting on BNPL interest).
Credit risk and higher delinquency: third-party BNPL providers face elevated charge-offs for consumer segments using BNPL repeatedly; carriers historically have lower credit-risk exposure because device payments are tied to service accounts with ability to collect via billing relationships.
Promotional unsustainability: heavily discounted or trade-in subsidized offers can compress margins and create volatility in financed receivables if trade‑in values or handset supply shifts.

4.Market Forecast and Trend Projections Through 2026 with Scenario Analysis

Projection framework: Three scenarios reflect macroeconomic variation, regulatory outcomes, and competitive displacement of carrier-originated financing by third‑party BNPL:

Base case (most likely): Modest continued growth in financed-dollar volume driven by rising device ASPs and stable adoption of installment payments. Projected compound annual growth rate (CAGR) for total financed device value: ~8–12% (2025→2026 continuation from prior trend). Carrier share declines gradually as BNPL integrations deepen.

Optimistic case: Faster BNPL acceptance at major digital retailers and better merchant economics for third‑party lenders lead to elevated consumer choice; regulatory clarifications are favorable or neutral. Projected CAGR: ~12–18%. Third‑party BNPL captures a greater share (up to ~30–35% by 2026) of financed dollars, particularly in online and retail channels.

Conservative case: Regulatory tightening, rising interest rates and delinquency slow consumer financing growth; carriers tighten underwriting and trade-in incentives. Projected CAGR: ~3–6%. Carrier share remains dominant; BNPL growth stalls.

Emerging trends and potential disruptors:

Embedded finance and point-of-sale banking: deeper partnerships between carriers/retailers and fintechs (Affirm, Klarna, PayPal/Pay in 4, Apple/Goldman Sachs) enable frictionless checkout and cross-selling of insurance and accessory bundles.
Regulatory standardization: clearer consumer‑credit treatment for BNPL could level the playing field with card and installment lenders, but may raise compliance costs.
Device lifecycle services: trade-in marketplaces and device-as-a-service (DaaS) subscription models could shift financed dollars from one-time purchases to recurring device subscriptions, impacting receivable profiles and churn economics.

Actionable Implications for Providers

Carriers: Preserve device-financing primacy by integrating flexible BNPL-like short-term options, enhancing trade‑in valuation transparency, and leveraging the billing relationship to manage credit risk.

Retailers & marketplaces: Differentiate with frictionless embedded BNPL offers, loyalty integration and bundled warranties that raise perceived value while protecting margins.

Manufacturers: Use manufacturer financing to lock premium-device buyers into upgrade and accessory ecosystems; explore DaaS pilots to monetize lifecycle and services revenue.

Conclusion

Installment plans and BNPL have become structural elements of U.S. mobile phone commerce. From 2022–2025 the financed-device market expanded as device ASPs rose and consumers sought cash‑flow flexibility. Carriers continue to originate the majority of financed dollars, but third‑party BNPL made inroads—especially in retail and online channels and among younger buyers. The market through 2026 will be shaped by how regulators treat BNPL, whether BNPL providers can sustainably manage credit risk, and how carriers and manufacturers adapt by bundling, subscriptions and embedded-finance partnerships.

Strategic takeaway: stakeholders should prepare for a finance-first purchase journey by streamlining checkout, clarifying trade‑in and interest disclosures, and testing subscription and DaaS models. Those who align device marketing, trade‑in mechanics and financing will capture the outsized advantage in upgrade cycles as device prices continue to rise.

Selected references and further reading: carrier investor relations pages (Verizon, AT&T, T‑Mobile), industry analysis hubs (Counterpoint Research, Statista), BNPL coverage and research (PYMNTS, CFPB, FTC). Specific sources: Verizon Investor Relations, AT&T Investor Relations, T-Mobile Investor Relations, CFPB, FTC, PYMNTS.com, Statista.