The proliferation of Buy Now, Pay Later (BNPL) services has sparked a debate about their impact on consumers and the potential for debt accumulation. While these apps offer a convenient way to make purchases without immediate financial burden, they can also lead to problematic debt, particularly among financially vulnerable individuals. The BNPL model allows users to pay a quarter of a purchase upfront, followed by three interest-free installments, but late payments incur fees. Data shows mixed outcomes; while many users do not default, the rate of delinquency has been rising. High-income households dominate the user base, yet a significant number of BNPL users also rely on other credit products, indicating potential financial distress. Regulators face the challenge of balancing consumer protection with financial inclusion, as BNPL services can provide access to credit for those without traditional banking options. The article calls for a comprehensive regulatory approach to ensure the sustainability of these services.
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