Search

Showing results for “Buy Now, Pay Later”

Jump to a topic

Buy Now, Pay LaterBuy now, pay later companies offer services that allow online shoppers to buy something immediately and pay for it in installments—typically without the need for the applications or hard credit checks associated with credit cards. The BNPL industry has boomed in the last decade, led by fintech companies Affirm, Klarna, and Afterpay, which have targeted young adults. Specifically, using buy now, pay later to shop became more popular during the COVID-19 pandemic, when BNPL companies moved quickly to partner with online retailers as lockdowns drove an uptick in e-commerce. Some see BNPL as a way to allow borrowers easy access to cash with relatively few barriers. However, personal finance experts have warned that BNPL could be risky for consumers: For instance, although BNPL is often advertised as 0% interest loans, missed payments can still result in fees and collections.Explore Buy Now, Pay Later

Fintech Credit Cards

What we've found

Why consumers could soon see the impact of buy now, pay later loans on their FICO credit scoresFICO rolled out its first-ever BNPL-specific credit scoring models in June 2025. While missed installments can now negatively impact a credit score, there's also the potential for on-time BNPL installment payments to help boost scores. Yahoo Finance Buy now, pay later loans typically split payments into 4 installmentsWhile they're marketed as "interest-free" loans, BNPL loans often have penalties for late payments, such as late fees in varying amounts depending on the BNPL company used to make the purchase. BNPL users often pay 25% of the BNPL loan at checkout, and then pay the remaining balance in three more installments over the course of roughly six weeks, depending on the BNPL company and agreement. CNBC What is buy now, pay later?The buy now, pay later industry allows consumers to buy something immediately and pay in installments, typically without the need for applications or credit scores associated with credit cards. BNPL has boomed in the last decade, led by fintech companies Affirm, Klarna, and Afterpay, which have targeted young adults. Some critics say BNPL is a reinvented version of payday loans that allow borrowers easy access to cash with relatively few barriers. The Wall Street Journal The shadow banking system is a group of intermediaries that operate outside of normal banking regulationsThe nonbank financial intermediaries that make up the shadow banking system legally provide services that are similar to those of traditional commercial banks. Although the term isn't used as often as it once was, private credit firms are technically part of the shadow banking system, as are hedge funds, payday lenders, buy now, pay later companies, and more. Encyclopedia Britannica The Consumer Financial Protection Bureau is looking closely at BNPLGiven the lack of data around BNPL services in comparison to other financial products such as credit cards, the CFPB has conducted research to better understand BNPL products and how they could harm and benefit consumers. Consumer Reports The story of Klarna's IPOBNPY company Klarna went public on the NYSE in September 2025, roughly 20 years after it was founded. At the time, Klarna made roughly three-quarters of its revenue via merchant fees, charging a small premium for each purchase. Yahoo Finance BNPL may be adding a layer of debt that doesn't show up in economic dataGiven somewhat limited regulation in the BNPL space, data about its usage is limited—many BNPL firms have resisted sharing information about user purchases, finances, and more thus far. As more people begin using buy now, pay later services, experts are concerned about whether BNPL is adding a new layer of "hidden leverage" to the economy. Odd Lots Gap and Sephora now accept BNPL, despite paying up to 8% per saleDespite these merchants paying roughly 2% to 8% of each sale's cost (more than they pay for most credit card processing fees), they're signing on, in part, because BNPL can help them improve their conversion rates at checkout. Marketplace BNPL has 19th-century roots, but the pandemic made it mainstreamThe modern BNPL model didn't take off until the COVID-19 pandemic, when consumers were stuck at home and lockdowns forced them to shop online rather than in person. The number of US BNPL loans grew more than tenfold from 2019 (16.8 million) to 2021 (180 million), according to a Consumer Financial Protection Bureau report. Richmond Fed Affirm's COO recently said that the company believes the credit card is 'going the way of the VHS tape'Some people use buy now, pay later apps as an alternative to credit cards. BNPL services have a lower barrier to entry than credit cards—many frequent BNPL users have low credit scores. The Wall Street Journal Over 25% of Americans regret using BNPL due to unexpected costsAlmost 24% of buy now, pay later users have missed payments, with younger users (32% of 18- to 29-year-olds) being more likely to fall behind on payments than their older counterparts. (Only 12% of adults age 60 or over had done the same.) The Motley Fool BNPL's biggest risks include the ability to stack multiple loans simultaneouslyBuy now, pay later loans come with some risks, such as the hefty late fees that can add up over time in the case of missed payments. However, personal finance experts say that tactics like reading the fine print can help consumers use these financial tools more safely. NBC News The story of Apple Pay Later, a short-lived BNPL serviceApple rolled out its own buy now, pay later service in 2023, but Apple shut it down the following year. Instead, Apple made changes to let its Apple Pay users make purchases and access installment loans through BNPL company Affirm. CBS News Nearly half of millennials and Gen Z use BNPL, versus 21% of older generationsWhile applicants typically need a good credit score and credit history to qualify for many credit cards, that's not the case with buy now, pay later loans, making them more accessible forms of payment for younger generations. NPR BNPL companies typically make money via merchant fees rather than interestWhen a merchant partners with a buy now, pay later app, consumers are more likely to spend more money with that merchant—meaning that the merchant is willing to pay a small fee in exchange for the ability for customers to pay with buy now, pay later. US Chamber of Commerce An explanation of hard credit checks vs. soft credit checksSome buy now, pay later services do a soft credit check rather than a hard credit check, like credit card companies would do when someone applies for a card. While hard credit checks can impact your credit score, soft pulls typically do not. Experian The BNPL industry boomed amid a surge in online shopping during pandemic-era lockdownsThe buy now, pay later industry allows consumers to buy something immediately and pay in installments without the need for lengthy application and approval processes or high credit scores—and fintech companies Affirm, Klarna, and Afterpay are leading the charge by targeting young adults. WSJ

Try another search?