Key facts
- BNPL loan transaction value is estimated to reach $70 billion in 2025, representing about 1.1 percent of total credit card spending.
- BNPL lenders are now offering loans for essential needs like electricity and rent.
- Nearly half of BNPL users have used the service for groceries, and over a third have used it for medical care, utility bills, and housing costs.
- Many BNPL users have subprime credit, and a substantial percentage have missed payments.
- BNPL penalty fees can be as high as a 200 percent APR.
Buy Now, Pay Later (BNPL) services are increasingly being used by consumers to finance essential expenses, including groceries, utilities, and rent, amid a worsening affordability crisis. While BNPL has experienced rapid growth, with transaction values estimated to reach $70 billion in 2025, concerns are mounting about its impact on consumer financial health and potential implications for financial stability.
Data from the Consumer Financial Protection Bureau (CFPB) indicates that BNPL lending saw explosive growth between 2019 and 2021, with nominal origination values increasing significantly. After 2021, growth stabilized to a more moderate pace, with an estimated annual growth rate of around 20 percent post-2021. Six leading BNPL providers, including Affirm, Afterpay, Klarna, PayPal, Sezzle, and Zip, have provided data on their loan origination volumes and average loan sizes.
A recent poll reveals that nearly half of BNPL users have utilized these services for groceries, with substantial percentages also using them for medical care, utility bills, and housing costs. Furthermore, a significant portion of BNPL borrowers possess subprime credit, and many have missed payments in the past year. Critics argue that BNPL lenders are capitalizing on consumer desperation, offering loans with penalty fees that can equate to a 200 percent APR, blurring the lines with payday loans.
Despite these concerns, the Richmond Fed's Economic Brief notes that the impact of BNPL on financial stability appears limited at present, with no clear evidence of elevated stress in other consumer credit markets. BNPL users generally retain access to traditional credit and tend to carry higher balances on other unsecured products, though a causal relationship between BNPL usage and increased unsecured debt balances is not definitively established.