Last Cyber Monday, BNPL (Buy Now, Pay Later) transactions reached $991.2 million, marking a 5.5% year-over-year increase according to Adobe Analytics. This dramatic shift in consumer behavior is further underscored by a revealing SplitIt study, which found that more than two-thirds of parents intend to leverage pay-later options to finance their holiday purchases this year.
Companies are actively responding to growing demand. Affirm, a leading BNPL platform, rolled out several pre-holiday updates to enhance user experience, including improved payment management tools and streamlined credit offer discovery. Meanwhile, major retailers are expanding their BNPL presence – Amazon, for instance, strengthened its position through an acquisition of BNPL startup Axio.
What forces are propelling this growth?
A key factor is strong interest from Gen Z, with Frich revealing that 50% of its customer base (1 million Gen Z users) admitted they “wouldn’t have purchased an item if a BNPL option wasn’t available”. Whether it be an increased reliance on digital payments and credit cards, rising interest in online shopping platforms, or minimal barriers to entry for young shoppers, these factors are fueling BNPL’s expansion. Discrepancies in financial literacy could also pose a key factor, with Charity Citizens Advice surveying BNPL users and discovering that more than half of young shoppers have bought items online with the credit option unknowingly.
BNPL users are significantly more likely to revolve on their credit cards: 71 percent of users revolved on their credit cards in 2023, compared with 40 percent of non-users. As a result, users are likely to accrue high interest costs on every dollar they charge on their credit cards. They are also likely to have reached the credit limits on their credit cards, preventing them from further borrowing (Federal Reserve Bank of Boston).
Looming threats in the industry include extensive efforts to restrict BNPL by corporations and federal regulators as well as an increased awareness of the financial risks associated with the service. A few notable examples include Chase banning credit cards for BNPL payments, the Dutch government looking to ban BNPL in physical retail outlets due to the “financial risks they pose for consumers”, and Apple discontinuing its service in the U.S due to a potential increase in compliance costs set by the Consumer Financial Protection Bureau (CFPB).
Why buy now, pay later debt could become a problem for the U.S. economy
On the flip side, the CFPB’s win before the Supreme Court (to classify BNPL as a credit card provider), could further legitimize BNPL as a mainstream payment method in the future.
BNPL presents itself as a transparent and accessible option for shoppers, granting consumers a greater sense of control over their budget through reduced installments. However, beyond the straightforward application of making purchases more "affordable", the model raises concerns about debt accumulation, regulatory oversight, and consumer protections. If BNPL continues to grow in popularity, questions will arise concerning its long-term impact on financial well-being and how lenders will adapt to evolving regulations.
Shops with over $10 million in annual revenue offering BNPL have about 27,000 more monthly unique visitors than those without BNPL (Statistica).
Looking toward 2030, BNPL's explosive growth trajectory may face significant headwinds. While early adoption rates soared due to convenient access, increasing regulatory scrutiny could reshape the landscape. Mandatory credit checks, standardized reporting requirements, and stricter lending criteria are likely, hindering sector expansion.
In addition, consumer sentiment could shift as the first wave of heavy users endure the long-term effects of installment-based purchasing. Early warning signs of debt fatigue—a state where consumers are overwhelmed by multiple financial obligations—will lead to decreased confidence in these services.
“The constant barrage of purchasing options online can lead to decision fatigue. BNPL's streamlined process can bypass this fatigue, making impulsive ‘yes’ decisions more likely”
Lastly, rising media coverage of "BNPL regret" and increasing default rates could craft a more cautious approach to these services, particularly among younger consumers who perceived BNPL as a more responsible alternative to traditional credit. With the average purchase amount of a BNPL loan being $132, increased consumer awareness could result in a more measured growth pattern, with consumers reserving BNPL for specific, planned purchases rather than routine spending.