BNPL

Buy now, pay later (BNPL) is a form of short-term consumer credit. It lets shoppers buy goods or services and pay over time, usually in installments. Many plans advertise no interest if paid on time, but some charge interest or late fees.

At checkout, consumers select BNPL as the payment method. A provider assesses the purchase, sometimes with a soft credit check, and approves the credit line. The merchant receives funds upfront, minus a processing fee, while the consumer repays the lender over time.

Typical terms involve fixed installments over weeks to months, often four payments over six weeks. Some plans offer longer financing with interest. Late payments may incur fees. Terms and fees vary by provider and jurisdiction.

Major providers include Klarna, Afterpay, Affirm, Zip, and Splitit. The sector has grown through e-commerce integration and, increasingly, in-store payments and mobile wallets.

Advantages for consumers include convenience, predictable payments, and expanded purchasing power. Merchants may gain higher checkout conversion and larger average orders, while risk is borne by the lender.

Critics cite consumer debt growth, transparency gaps, and potential for late or hidden fees. BNPL has drawn attention for targeting younger shoppers and raising data privacy concerns, with questions about credit scoring and affordability.

Regulation is evolving in many regions. In some jurisdictions BNPL is regulated as consumer credit, requiring disclosures, fair lending practices, and consumer protections. Authorities monitor marketing, fees, and data use, with ongoing policy development.