BNPL - Convenience Meets Growing Risk

Buy Now, Pay Later (BNPL) has transformed from a niche checkout option to a mainstream payment method.  Especially among younger generations. Its appeal is obvious: no interest, quick approvals, and the ability to spread costs over time. In 2024, nearly one in four Americans had used BNPL, double the adoption rate just a few years earlier.

But behind the glossy marketing, signs of strain are emerging. Surveys show that 41% of BNPL users reported being late on a payment in the past year, up from 34% the year before. Bankrate found that about half of users experienced issues like missed payments or overspending. These self-reported rates are much higher than the formal delinquency figures (often under 2%) reported by BNPL providers, largely because many payments are auto debited.

The risks aren’t limited to missed payments. The CFPB notes that BNPL borrowers have credit card utilization rates 60–66%, compared to 34% for non-users. Many are stacking multiple BNPL loans alongside other debts, increasing vulnerability if their financial situation changes.

Regulators are taking notice.  In the U.S., FICO will begin factoring BNPL activity into credit scores this fall, meaning missed payments could have long-term consequences.

BNPL is not inherently harmful.  It can be a useful budgeting tool when managed carefully. But the combination of ease, minimal upfront checks, and normalization of short-term debt means both consumers and providers need to approach it with more caution.

For merchants, BNPL remains a powerful conversion tool. For consumers, it’s a reminder that “pay later” is still debt.  And every installment comes due.

The key takeaway: BNPL’s growth story isn’t slowing, but its sustainability will depend on whether repayment discipline can keep pace with adoption.