The BNPL Boom: Convenience Today, Consequences Tomorrow

Over the past decade, Buy Now Pay Later (BNPL) companies have slowly but surely moved from a small niche into the mainstream. The formula behind their success is relatively straightforward: offer short-term installment credit with zero interest (if payments are made on time), charge sellers for the service instead of the buyers and integrate the option directly into online and retail checkout flows, making it a seamless and hassle-free experience. Initially, merchants were happy with increased conversion rates and higher value orders and consumers were happy they didn’t have to postpone their purchases or overthink their impulse buys. A decade later, however, BNPL has morphed into something a lot more complicated and increasingly concerning.

For consumers making small discretionary purchases, to whom BNPL solutions were originally marketed, the model delivered genuine convenience with no strings attached. Unsurprisingly, adoption surged, making BNPL the multibillion-dollar global industry it is today and drawing in fintech challengers, traditional banks, and major payment processors alike. Proponents of these solutions argue that the convenience and the ease of use this model offers expands access to credit to people who might not have had it through conventional options and provides households with a flexible way to manage short-term cash flow without the exorbitant interest rates commonly associated with revolving credit cards. This is a solid argument, and the data bears it out, however, as the sector matured, it became increasingly clear that while this part of the story is true, it is not the whole story.

The problems began to arise when the borrower profile and the ways in which the BNPL credit was used shifted from what was advertised. In the early 2010s, companies like Klarna, Afterpay, and Affirm specifically designed their products for Millennials and Gen Z: the credit-averse younger consumers who came of age during or shortly after the 2008 financial crisis and were famously wary of traditional credit cards. BNPL was marketed as a "safer" way to build a payment history without the "debt trap" of revolving interest. BNPL options initially started showing up on fashion and beauty e-commerce sites, as they were targeting "aspirational" shoppers who wanted to buy a $200 jacket today but would be more comfortable paying for it with their next paycheck. It was originally meant to be a way to pay for “wants” not needs (and not for big ticket items either), and to be used by people who had the money to pay for them but would rather space out the full amount in a few installments.

As time passed and as economic (and especially inflationary) conditions changed, the borrower profile shifted. Recent research from the U.S. Consumer Financial Protection Bureau (CFPB) indicates that BNPL usage is heavily concentrated among financially stretched borrowers. According to research findings published in 2026 by LendingTree, there is a marked rise in delinquency, with 41% of BNPL users making at least one late payment in the past year, an increase from 34% in 2024. More strikingly, the research revealed that most BNPL users don't stop at just one loan: 60% say they've held multiple BNPL loans simultaneously at some point during the year, and about one-third borrowed from multiple providers. These figures lend empirical weight to growing concerns about “loan stacking,” i.e. consumers juggling overlapping installment obligations across platforms.

The uses of the loans are also moving from wants to needs. One of the most documented shifts in BNPL borrower behavior is the rise of its use at supermarkets. 25% of BNPL users now use the service for groceries, a significant jump from 14% in early 2024, while among Gen Z users, the rate is even higher with 33% reporting they use BNPL to afford food, making it the 4th most common use for the service in that demographic. In fact, most major delivery and grocery platforms (e.g., DoorDash, UberEats, and major grocery chains) have already integrated BNPL specifically to capture "everyday spend." This year also saw an even more concerning development. Until now, BNPL was rarely used for rent due to high transaction amounts, but new BNPL partnerships and deals changed that. Leading BNPL provider Affirm partnered with fintech company Esusu to provide renters with “a flexible option for managing one of their largest monthly expenses”. In other words, BNPL is becoming the new payday loan, as more and more users are resorting to it as a "bridge" between paychecks.

This not just concerning for the borrowers themselves, who now risk ending up in the very debt trap they were trying to avoid by stacking multiple loans and late payment fees (they might not be as punishing as late credit card payments, but they can still add up), but it also paints a very dismal bigger picture. It says a lot about the state of the real economy and the impact that the sustained inflationary pressures have had on the average household.

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