Buy Now, Pay Later (BNPL) schemes are becoming increasingly popular worldwide, mirroring the trend of governments accumulating debt without immediate payment. While BNPL offers consumers a quick and easy way to make purchases without upfront costs, it also poses significant risks. Reports indicate that the number of individuals seeking help regarding BNPL debt has more than doubled in 2023 compared to the previous year, highlighting a concerning trend of problem borrowing. The frictionless nature of BNPL allows users to accumulate multiple loans from various providers, leading to a high likelihood of default. Studies show that BNPL users in the U.S. have a delinquency rate of nearly 18%, significantly higher than non-BNPL users. In response to these risks, regulators in the UK and the U.S. are moving to bring BNPL under stricter oversight. Additionally, major BNPL firms are exploring new funding methods, such as securitization, which could further complicate the landscape of consumer finance.
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