Latest news with #BuyNowPayLater
Forbes
an hour ago
- Business
- Forbes
Affirm Stock Down As Klarna's Buy Now, Pay Later Credit Loss Rises 17%
Despite recent growth, some investors see a darker future for the industry Affirm Holdings stock is down 17% in 2025 after predicting lower-than-expected growth for the current quarter While the default rate on Buy Now, Pay Later loans rises, industry executives say they're not worried A weak first quarter gross domestic product report bodes ill for the industry Shares of Affirm Holdings — a provider of Buy Now, Pay Later loans — have lost 17% of their value in 2025, according to Google Finance. In the last three years, Affirm stock has risen considerably — rising 126% to $52 a share — and the industry has expanded faster than 50% annually. After reporting solid revenue and profit growth in the company's third quarter — while issuing a weak forecast — is the stock a bargain? Earlier this month, the stock fell 13% on Affirm's weak forecast and its bet on 0% loans, according to CNBC. The bearish case is bolstered by rising BNPL default rates at Klarna and a weaker economy which could add to the bad loans. Bulls admire the company's industry leadership and long-term approach to running the company — a view Affirm reinforces. 'It took consumers and merchants and sort of the universe about a decade to figure out what we are and just how different and important what we have found to work really is,' Affirm founder and CEO Max Levchin told CNBC. Wall Street sees the stock as significantly undervalued. Affirm shares trade 29% below $67.18 — the average price target of of 21 Wall Street analysts, TipRanks wrote. In Affirm's fiscal third quarter, revenue met expectations, profit exceeded them and its revenue forecast for the fourth quarter fell short. Here are the key numbers: Affirm's online loans rise or fall depending on the level of consumer spending on electronics, apparel and travel. The company has been aiming to add new customers — reaching 22 million in the third quarter, a 10% growth rate, noted CNBC. Through partnerships with Apple , Amazon and Shopify, GMV for The Affirm Card rose 115% from the year before while the number of active cardholders more than doubled. business is closely tied to consumer spending, as its online loan offering has become popular with sellers of electronics, apparel and travel. The company is also offering 0% interest loans in which merchants — and sometimes manufacturers — boost sales by subsidizing borrowing costs to drive sales. Such loans increased 44% — serving as an alternative to a traditional merchant discount. 'It may be an expensive net discount rate, but it's better than 10% off,' Affirm Chief Financial Officer Rob O'Hare told CNBC. Affirm says these loans extend the lifetime value of its customers. 'Every time we sign someone new through a 0% promo, some number of months or quarters from now, that's a prime candidate for the Affirm Card, and that's a lifetime value booster,' Levchin said on the company's Q3 earnings call. The growth in BNPL loans has been significant in recent years. This growth has drawn new investment into the industry and loan default rates are rising for some large participants. Since 2021, the BNPL business has accelerated at a 55% average annual rate from $97 billion, according to my June 2022 Forbes post, to $560 billion in 2025, according to Research and Markets. To finance that growth, Affirm has been securitizing — bundling and selling — some 30% of its loans. More recently, the rise of private credit has enabled Affirm to sell loans directly to institutions. These include insurers such as Liberty Mutual and Prudential. Moreover, this year private credit firm Sixth Street initiated a three year deal to buy $4 billion of Affirm's loans, according to the Wall Street Journal. Recent data suggest BNPL credit problems could rise. How so? Nearly two-thirds of BNPL loans went to borrowers with risky credit scores, according to a January report from the Consumer Financial Protection Bureau. 'Americans were using 'buy now, pay later' as a Band-Aid on top of their credit card debt,' Julie Margetta Morgan, a former CFPB official who is now president of the Century Foundation, told the Times. 'We look at it as a kind of bellwether of risks to the overall economy,' she added. BNPL providers downplay these risks. For example, Klarna — the privately held Stockholm-based BNPL provider which recently paused its IPO — suffered a 17% rise in credit losses in May. Klarna said the losses were trivial. 'There's nothing troubling or worrisome from this data,' company spokeswoman Clare Nordstrom told the New York Times. Affirm was similarly upbeat. 'We really aren't seeing anything we would label as signs of stress with our borrowers,' O'Hare said, according to the Times. BNPL customers would be especially vulnerable if the economy worsened — which is why during the Biden era, the CFPB 'called for measures to safeguard them,' the Times wrote. Unfortunately, the economy contracted in the first quarter of 2025 — with gross domestic product falling at a 0.2% rate, according to the Bureau of Economic Analysis. As U.S. household finances get worse, BNPL consumers and providers could suffer. 'Consumers are going to be squeezed and more reliant on these products,' Morgan explained to the Times, 'and the companies are being offered a free pass to construct those products in ways that are the most profitable to them.' Given the 29% upside implicit in Affirm's price target, the bulls may prevail over the bears. Affirm bears argue the company's profitability fell short of expectations because the lower growth in GMV due to a surge in 0% APR loans was not sufficient to offset their revenue less transaction costs. This is why Affirm fell short of investor expectations. The rise in 0% loans 'led to a lower take rate and RLTC margin than most forecasts,' Citizens wrote, according to CNBC. Two other analysts remain bullish on Affirm. Goldman called the company a 'strong category leader in BNPL and a share gainer vs. legacy credit providers,' noted CNBC. Barclays is bullish on recent partnerships such as the one between Affirm and Costco. Affirm sees consumers continuing to spend despite uncertainty. 'People are stressed out about the economy, yet they're shopping, they're buying, and they're paying their bills — at least they're paying their bills back to us on time,' Levchin told CNBC.
Forbes
a day ago
- Business
- Forbes
Klarna, Etsy, And A Driverless Truck Company Learn A Few Harsh Lessons About AI
One of my favorite AI stories this year is the reckoning of Swedish Buy-Now-Pay-Later platform Klarna. "Klarna's AI assistant handles two-thirds of customer service chats in its first month!" the company giddily announced to the public in early 2024, further trumpeting that it did the work of '700 customer service agents.' And that wasn't all. "About 12 months ago, we would have been about 5,000 active positions within the company, and we are now down to about 3,800," the company's CEO said last September. "By simply not hiring, which we haven't done since September ... the company is kind of becoming smaller and smaller.' Replacing people with AI. Great idea! Except…not. Just a few weeks ago Klarna's CEO - who literally used an AI doppelganger to deliver an earnings report - admitted to Bloomberg that the company is "slowing down its job cuts" and getting back to hiring real people to do customer service because the company discovered that people actually want to talk to people. Separately, a representative from Klarna said that the company is "not reversing on AI" and is "continuing to invest heavily in AI, including rebuilding our tech stack to be AI-first.' But the company also admitted that their CEO "acknowledged that an overemphasis on cost—not AI itself—led to lower quality." Turn's out Klarna's not the only company experiencing buyer's remorse from AI. For example, a company that announced "driverless trucks" built on an AI platform that would be rolling through Texas recently discovered that they actually needed drivers after all. Translation company Duolingo aspired to replacing their translators with AI bots only to change course after a backlash from its community. Etsy has faced similar backlash from its community thanks to non-human-looking-AI-generated products flooding its system. After firing 8,000 employees in order to replace them with AI systems, IBM wound up re-hiring many due to "gaps in service, dips in employee morale, and delays in resolution." Australian telecom company Optus, after attempting to automate functions with AI, turned around once it found that AI couldn't handle many issues as well as humans. McDonalds ended its drive-through AI-based ordering test after discovering that humans could do a better job servicing their customers. Which is why it should be new surprise that a recent report by organizational design and planning platform firm Orgvue found that as much as 55 percent of companies that had laid off staff due to AI automation now regret the decision. According to the report "these companies found that AI could not fully replicate the nuanced understanding and adaptability of human workers, leading to a reevaluation of their workforce strategies and a renewed emphasis on human roles." Uh…duh? This stuff just isn't ready for prime time in 2025. And companies who think that they can use AI instead of humans this year are going to learn the same lessons as Klarna, McDonalds and others. I stayed at a Marriot conference resort recently and called to find out if the restaurant was still open. A very human-like bot answered my call, and at first I thought it was a real person. But I figured out quickly that it wasn't. Something was Just like you can sense someone else in a room with your eyes closed, humans innately know when they're not dealing with another human. We quickly figure out when we're talking to a bot. Maybe not right away. But give me just 60 seconds on the phone with an automated, AI-driven voice and I'll be able to figure out that the "person" on the other end isn't a person. AI isn't yet capable to respond quickly, jump back and forth between questions and issues and generally behave like a human. All you have to do is ask a personal question or veer off track from the main conversation and most AI bots get confused and then sound like…a bot. How many times do you furiously punch "0" on the phone the minute an automated system picks up? Navigating through these help desk mazes can be infuriating and time consuming. But that doesn't mean there isn't a role for AI. A good customer service system using AI will eliminate the "press 1 for customer service, press 2 for sales, etc." with a human-like voice asking questions and (hopefully) giving answers quickly. But therein lies the most important thing: if an answer can't be gotten quickly or if the caller simply wants to vent to a human, there has to be quick way to take the red pill (or is it the blue pill?) and get out of the Matrix. My advice to companies is to understand that people do want to talk to people sometimes and to understand that not every question is a simple question. Be transparent when a bot answers the phone and give us a way out. Don't get rid of your customer service staff. Use AI to screen and answer low-level questions and then use your humans for everything else. 'Humans deeply care about what other humans think—it's something that seems hardwired into us,' OpenAI's CEO Sam Altman said last year at a conference. 'While we may keep developing better tools, our focus will always return to one another.' Many companies think they're doing the world a favor by issuing press releases advertising their AI investments. My advice: don't. It's simply bad PR. Klarna made the mistake of gleefully telling the world how they're literally replacing humans with AI. Now they look dumb. Please don't advertise how you're replacing people with AI. Don't be like the Shopify CEO who publicly stated that it has to be proven that any new job can't be done with AI. He looks like a villain. No one wants to hear it. Keep it to yourself. Many workers are terrified of losing their jobs and when a company like Shopify does this kind of stuff it says to them: we don't care about you. Good luck finding talent after that. Who wants to work for a company that considers their people so value-less that they'll not only replace them with bots but tell the universe how smart they are by doing so? AI is great and it will get better. But never believe that it will be good enough to fully replace a human interaction. It never will.
Associated Press
3 days ago
- Business
- Associated Press
Global Payments Market to Reach USD 5.30 Trillion by 2030, Says Mordor Intelligence
Payments market grows with digitization, e-commerce, mobile pay, and real-time tech. Trends: digital wallets, BNPL, contactless & mobile commerce. HYDERABAD, TELANGANA, INDIA, May 28, 2025 / / -- According to a 2025 report, payments market is projected to be valued at USD 3.16 trillion in 2025 and is anticipated to reach USD 5.30 trillion by 2030, growing at a CAGR of 10.88% during the forecast period from 2025 to 2030. The report covers the global payment market, segmented by mode of payment (POS and online sales), payment methods (card payments, digital wallets, cash on delivery, bank transfers, Buy Now Pay Later), end-user industries (retail, entertainment, healthcare, hospitality), and geography (North America, Europe, Asia-Pacific, Latin America, Middle East & Africa). It includes market size and forecasts in USD for all segments. The global payments industry is shifting decisively toward digital-first models, with governments, financial institutions, and consumers steadily embracing electronic alternatives to cash. As per the Mordor Intelligence report, global payment volumes continue to increase, driven by internet access, smartphone usage, and embedded finance models. Businesses are modernizing payment infrastructure to support seamless, real-time processing. Online commerce growth and the popularity of digital wallets are reducing reliance on traditional banking tools. Innovation Is Fueling Adoption According to Mordor Intelligence, technologies like NFC, QR payments, and tokenization are accelerating the shift to digital modes. Embedded finance and 'Buy Now, Pay Later' (BNPL) services are being widely adopted. Major payment networks and fintech firms are investing in scalable cloud-based platforms that enable efficient transaction processing. Government-backed instant payment systems are facilitating interoperability and speeding up settlement cycles. India's Payment Landscape Expands Rapidly India's payments market is forecasted to grow from USD 421.50 billion in 2025 to USD 960.22 billion in 2030, at a CAGR of 17.9%, according to Mordor Intelligence. The Unified Payments Interface (UPI) has become a national standard for digital payments, allowing easy peer-to-peer and merchant transactions. With increasing smartphone use, digital literacy, and regulatory support, cashless payments are becoming a daily routine in India. Read more about the India Payments Market: India Payment Gateway Market: Secure Processing Gains Ground India's payment gateway market is projected to grow from USD 2.07 billion in 2025 to USD 3.62 billion in 2030, with a CAGR of 11.89%, as per Mordor Intelligence. This segment plays a vital role in authenticating and processing online transactions. With increasing merchant onboarding and trust in e-commerce, more businesses are integrating robust gateways. This trend is particularly strong among small retailers shifting to omnichannel models. Get insights into the: India Payment Gateway Market Report Conclusion: The Payment Ecosystem Is Reaching New Heights The global and Indian payments markets are both witnessing structural changes that are fundamentally altering how individuals and businesses transact. With a steady push from digital transformation, the next five years are expected to see further integration between payments and daily life—from instant peer-to-peer transfers to AI-powered checkout experiences. India's strong CAGR and innovation in payment infrastructure make it a key market to watch. The momentum is clear: payments are not just going digital; they are becoming more intelligent, interoperable, and user centric. Read more about the Global Payments Market: About Mordor Intelligence: Mordor Intelligence is a trusted partner for businesses seeking comprehensive and actionable market intelligence. Our global reach, expert team, and tailored solutions empower organizations and individuals to make informed decisions, navigate complex markets, and achieve their strategic goals. With a team of over 550 domain experts and on-ground specialists spanning 150+ countries, Mordor Intelligence possesses a unique understanding of the global business landscape. This expertise translates into comprehensive syndicated and custom research reports covering a wide spectrum of industries, including aerospace & defense, agriculture, animal nutrition and wellness, automation, automotive, chemicals & materials, consumer goods & services, electronics, energy & power, financial services, food & beverages, healthcare, hospitality & tourism, information & communications technology, investment opportunities, and logistics. Jignesh Thakkar Mordor Intelligence Private Limited +1 617-765-2493 [email protected] Visit us on social media: LinkedIn Instagram Facebook X Other Legal Disclaimer: EIN Presswire provides this news content 'as is' without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.
CNET
23-05-2025
- Business
- CNET
Costco Offering Buy Now, Pay Later With Affirm. But Is It Worth It?
Nora/CNET Costco recently announced it's partnering with Affirm to offer its customers Buy Now, Pay Later plans for online purchases between $500 and $17,500. This BNPL plan lets you split a purchase into up to 36 payments across several months, and charges interest. A typical pay-in-four BNPL that you may be familiar with lets you split a purchase into four weekly payments, with no interest.. However, using a BNPL plan isn't necessarily always a good deal, and unlike some BNPL plans, Affirm's option charges interest. If the interest accrued substantially increases how much you'd spend -- under the guise of convenience or low monthly payments -- it's not actually a deal. And not everything should be financed, either (looking at you, DoorDash). So if you're planning to shop online with Costco this Memorial Day, you'll likely encounter Affirm's BNPL option. Here's how to figure out how much the plan could actually cost you before you decide whether to use it. What's Costco's new Affirm BNPL plan? Your standard BNPL plan usually lets you split a purchase into four weekly payments over the course of a month, and won't charge any interest. This BNPL plan through Affirm lets people split purchases of $500 or more into three to 36 monthly payments. Interest rates range from 10% to 36% APR, but Costco BNPL plans charge simple interest, meaning interest accrues only on the principal balance. So if your balance is $1,000 and your interest rate is 5%, you'd accrue $50 in interest each month. That's different than compounding interest, the way credit card balances charge interest. Compounding interest will end up costing you much more over time than simple interest because it snowballs. Each month's interest is added to the original balance, then interest accrues on the new balance each month. Based on the previous example, the $50 you accrued in interest the first month would be added to your original balance of $1,000. So you'd accrue interest on $1,050 the next month, and so on. Your interest rate will depend on your credit history. When you apply for a BNPL, Affirm will run a soft credit check, which means it won't impact your credit score. How to use Affirm at Costco You can choose Affirm as your payment method at checkout for online purchases. You'll need to provide some additional info to get approved to use Affirm: You'll need to submit your license, passport, identity card or resident permit by uploading a photo of whichever you choose. Connect your phone or laptop to take a photo of yourself with your camera. You'll need to enter your income and provide the last four digits of your Social Security number. You'll then pick from the payment plans offered. Each option will show the length of the repayment period, what your monthly payment will be and how much interest you'll end up paying. You'll need to manage payments through the Affirm app or on You can manually make your monthly payments, set up automatic payments or pay off your balance early. You'll pay less interest if you pay it off early. Should you use it? We do the math BNPL can be a good tool for financing a larger purchase, but it can sometimes be confusing to know how much you'll actually end up paying. We'll run through a few purchase examples to give you an idea of how much you might pay. This test was also a good way for me to find out that Costco charges a 5% non-membership fee. So you're numbers may look different if you're a Costco member. Thomasville Lowell Corduroy 8-piece Modular Sectional If you're looking for a new couch, you might've seen this 8-piece modular sectional everywhere on social media. It costs $2,499.99, or $2,834.21 after estimated taxes. After going through the Affirm soft credit check, I was offered a payment plan of 12, 18 or 24 months. The longer the plan, the higher the interest charge. Also, I got socked with the non-member surcharge -- $125 in this case. The 12-month plan would cost me $124.23 in interest, with 12 payments of $246.54, for a total cost of $2,958.44. would cost me $124.23 in interest, with 12 payments of $246.54, for a total cost of $2,958.44. The 18-month plan would cost $182.71 in interest with 18 payments of $167.61, for a total cost of $3,016.92. would cost $182.71 in interest with 18 payments of $167.61, for a total cost of $3,016.92. The 24-month plan would cost $242.16 in interest with 24 payments of $128.18, for a total cost of $3,076.37. For all plans, I was given an APR of 9.99% but with something called "Costco Value" that rate was reduced to 7.99%. Screenshot by Evan Zimmer/CNET LG 65" Class – OLED C4 Series – 4K UHD OLED TV How about a new TV to go with that couch? The LG 65" Class -- OLED C4 Series -- 4K UHD OLED TV (our editor's choice pick for best TVs for 2025) has a price tag of $1,299.99 at Costco, for a total of $1,474.19 with tax and the $65 non-member fee. Again, each plan came with an APR of 9.99%, which was reduced to 7.99% by "Costco Value." Here's what Affirm offered: The 6-month plan would cost me $34.56 in interest, with six payments of $251.46, for a total cost of $1,508.76, according to Costco's estimate. would cost me $34.56 in interest, with six payments of $251.46, for a total cost of $1,508.76, according to Costco's estimate. The 12-month plan would cost me $64.63 in interest, with 12 payments of $128.23, for a total cost of $1,538.76, according to Costco's estimate would cost me $64.63 in interest, with 12 payments of $128.23, for a total cost of $1,538.76, according to Costco's estimate The 18-month plan would cost me $95.06 in interest, with 18 payments of $87.18, for a total of $1,569.24, according to Costco's estimate. Screenshot by Evan Zimmer/CNET Roborock Qrevo MaxV Robot Vacuum and Mop with 7,000 Pa Suction Power What about a new robot vacuum to keep your entertainment space clean? Costco offers the Roborock Qrevo MaxV Robot Vacuum and Mop with 7,000 Pa Suction Power for $819.99. After taxes and a $57.50 non-member surcharge, it would cost me a total of $947.63. Affirm offered a 9.99% APR (7.99% from Costco Value) and: A 6-month plan that would cost $22.21 in interest, with six payments of $161.64, for a total of $969.84. that would cost $22.21 in interest, with six payments of $161.64, for a total of $969.84. A 12-month plan that would cost $41.53 in interest, with 12 payments of $82.43, for a total of $989.16. that would cost $41.53 in interest, with 12 payments of $82.43, for a total of $989.16. An 18-month plan that would cost $61.09 in interest, with 18 payments of $56.04, for a total of $1,008.72. Screenshot by Evan Zimmer/CNET Does BNPL impact my credit score? Affirm reports your on-time and late payments to Experian and TransUnion. The impact of BNPL payments on your credit score depends on which credit scoring model is used. For example, FICO Score 9 doesn't take into account negative or positive BNPL payments but FICO Score 8 does. FICO Score 8 is still the most commonly used credit score, so you could see an increase or decrease depending on your payments. Does BNPL save you money? BNPL can break a large payment up into bite-sized pieces, which can help you find room in your monthly budget. However, it doesn't save you money. When you add in the interest you'll pay over time, the product will cost you more than if you had paid the total original amount up-front. If you're looking to save money, consider creating a sinking fund for the purchase instead. Can you avoid interest charges entirely with the Costco/Affirm BNPL plans? No. You'll always pay interest if you use one of these plans. If you're looking to finance a purchase over multiple months and avoid interest charges, consider a credit card with an introductory 0% purchase APR. There are great rewards credit cards with promotional periods that let you earn cash back or points. But keep in mind you'll undergo a hard credit check when applying for a credit card, which will typically lower your credit score temporarily by a few points. And if you don't pay off your credit card before the promotional period ends, you'll start accruing interest at a much higher APR -- the average for credit cards is more than 20%. Also, you should only consider a new card if you actually need one and will continue to get value from it after the promotional period ends. The standard pay-in-four BNPL also provides a no-interest financing option but four weeks is far shorter than the 12-, 15- or 21-month introductory purchase APR you can get with some credit cards. There's also usually a maximum amount you can borrow with this type of BNPL plan. Costco/CNET Blue Cash Preferred® Card from American Express See at See at StackSocial Costco is best known for selling household items and groceries in bulk (plus seemingly inflation-proof rotisserie chickens). If you're thinking of becoming a member, you could save $20 with a digital gift card by signing up for the Gold Star membership* for $65 through StackSocial. This Gold Star membership is valid for one year and must be redeemed before June 30, 2025 once your purchase is made. Your gift card will be delivered to your email within two weeks of activating your card. See at See at StackSocial Legal Disclaimer: *To receive a Digital Costco Shop Card, you must provide a valid email address and set up auto renewal of your Costco membership on a Visa® card at the time of sign-up. If you elect not to enroll in auto renewal at the time of sign-up, incentives will not be emailed. Valid only for new members and those whose memberships (Primary and Household) have been expired at least 18 months or more. Valid only for nonmembers for their first year of membership. Not valid for renewal or upgrade of an existing membership. Promotion may not be combined with any other promotion. Digital Costco Shop Card will be emailed to the email address provided by the Primary Member at time of sign-up within 2 weeks after successful sign-up and enrollment in auto renewal. Digital Costco Shop Card is not redeemable for cash, except as required by law. Costco is not liable for incentives not received due to entry of an invalid address during sign-up. Digital Costco Shop Cards are not accepted at U.S. or Canada Food Court Kiosks. Neither Costco Wholesale Corporation nor its affiliates are responsible for use of the card without your the provided single-use promo code when entering your payment information. A Costco Gold Star Membership is $65 a year. An Executive Membership is an additional $65 upgrade fee a year. Each membership includes one free Household Card. May be subject to sales tax. Costco accepts all Visa cards, as well as cash, checks, debit/ATM cards, EBT and Costco Shop Cards. Departments and product selection may vary. (Note: You will see a $0.01 deduction on your membership cost after the promo code is entered. This indicates that your promo code has been successfully applied)
Forbes
22-05-2025
- Business
- Forbes
The ‘Buy Now, Pay Later' Trap, Explained By A Psychologist
Decision fatigue can make you impulsive. "Buy Now, Pay Later" can make you broke. Here's the ... More psychology behind the most seductive shopping trap. Long before Klarna, Zilch and Afterpay attracted consumers with their 'Buy Now, Pay Later,' schemes, department-store chains like Kmart had their own version of delayed gratification. For a small fee, customers could reserve an item, make payments over time and only take it home once it was fully paid off. But it required patience. Then came credit cards, which flipped the model: take it now, pay later. But this was regulated, and not everyone had access to a credit card by default. Buy Now, Pay Later (BNPL) schemes are not regulated and are a hybrid of both. They preserve the illusion of financial caution, like layaways once did, while delivering the joy of instant ownership. Because there's no need for a credit score, no official approval process and no institutional guardrails, even those still navigating early financial independence are being nudged into debt with a single tap. And if that wasn't enough, sellers are using one of the oldest psychological tricks in the book to ensure you default to BNPL: They're counting on you being too cognitively overloaded to think. There's a reason the phrase 'no-brainer' cuts both ways in this case. On the one hand, BNPL offers are, in theory, smart financial tools. Debt isn't inherently a bad thing. When used well, it can free up liquidity, which allows you to invest your money elsewhere while paying off a purchase in manageable chunks. In that sense, spreading out payments might feel like a savvy move. Most houses are bought on credit, because debt can be a strategic lever when matched with stable income and long-term planning. But a house appreciates. When we look at what's actually being financed, it becomes clear that the pattern is more impulsive, more reactive and far less considered. Nearly half of all BNPL purchases are clothing and fashion, according to data from Numerator. The average user decides to go the BNPL route because they can't afford the item outright. And the platforms know this. By the time most shoppers arrive at the checkout screen, they've already made dozens of micro-decisions — what brand, what size, what color, which seller and what shipping option. The sheer volume of information processed along the way quietly wears the brain down. It's called cognitive load, and psychological research shows that it drains your decision-making energy. A 2024 conference paper that focused specifically on this type of overload found that too much information on a page affects visual attention and decision quality. In this state, guiding the shopper toward a default path, like a Buy Now, Pay Later option highlighted by the seller, becomes easy and effective. BNPL blurs the line between affordability and accessibility. The moment a consumer can't pay on time, late fees stack up. And in most cases, BNPL platforms don't report timely payments to credit bureaus, meaning you don't build credit — but if your debt gets sent to collections, your score can tank. What starts as a convenience can quietly morph into a liability. A LendingTree survey found that 41% of BNPL users reported paying late in the past year, up from 34% the year before. Many of them weren't behind by more than a week — but repeat use and overlapping loans compound risk. Nearly a quarter of users said they'd had three or more BNPL loans active at once. Even more concerning is the shift in what's being financed. One in four BNPL users now say they've used it to buy groceries. And partnership between platforms — like Klarna and DoorDash, for instance — is making it easier to finance takeout. Debt is no longer tied to long-term assets or life upgrades. It's being used to delay the pain of day-to-day spending — a strategy that may feel necessary now but often backfires later. Most people think dopamine is the brain's pleasure chemical, but that's an oversimplification. Neuroscientists have long known that dopamine is more tied to anticipation than satisfaction. The surge hits when the possibility of reward seems real. That's why window shopping feels so good. That's also why scrolling through endless product pages late at night feels oddly energizing. Buy Now, Pay Later lowers the barrier between that dopamine spike and action. You don't need to earn the purchase, budget for it or sit with the desire. You just click 'Pay Later,' and the reward loop closes — fast. So, if you're trying to regain control, start by breaking that loop. Recognize that the emotional high is frontloaded, not backloaded. Wait 24 to 48 hours before buying anything that triggers a surge of want. You'll be surprised how often the urge fades, once dopamine exits the scene. And if you are tempted by the option to finance takeout, ask yourself if you'd still like to be paying for a burrito and a side of chips you had three weeks ago. Are you falling for the 'Buy Now, Pay Later' trap? Take the Financial Management Behavior Scale to find out if your financial management needs work.
