What makes “buy now, pay later” so attractive?
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Porcorex / Dublight / Getty images
It’s been a minute Animator Brittany Luse has an urgent need for a new sofa.
“I can feel the frame through the padding-it’s rough,” she said. “I don’t even invite my friends because I don’t want them to sit on this sofa. They deserve better than that!”
But she said that every time she found a pretty nice sofa online, she is choking when she arrives on the payment page.
“Taping my credit card number for a $ 4,000 sofa just feels good. It’s just a big commitment,” she said.
And every time she almost Click on “Buy”, she kept noticing something. Under credit card options, Apple Pay and Paypal were options that would lose it to buy the sofa and break down payment into four payments using Klarna, says or after. These companies offer loans “buy now, pay later” (BNPL).
Like the It’s been a minute The team dug more, we discovered that BNPL was gaining popularity – more than one in five used BNPL according to At the Consumer Financial Protection Bureau (CFPB), and most of these users have no credit.
“I would divide the basis of users into two main categories of heavy” Buy now paying later “users: young people and people with poor or limited credit history,” said NPR Life kit Andee Taglewho reported on this subject. “And the reason is that the barrier at the entrance is much lower to” buy now, pay later “than your credit card or your typical bank loan”.
But when the news announced that Klarna joins Doordash so that customers can “eat now, pay later”, there were a lot of concern On the prospect of funding burritos. And after discovering a lendingtree investigation This 25% of BNPL users use loans for everyday purchases such as grocery store, Brittany wondered about the risks of a necessity such as food entering the BNPL universe.
So she called Malcolm Harris, author of Palo Alto: a story of California, capitalism and the world. He said that was not what it is about.
“This is the delivery itself, not food; it is this convenience,” he said. “We have seen the same activity scheme with hotels and Airbnb, for example, or with taxi companies like Uber and Lyft, for example, where you had large deep pocket investors who finance these companies at a way of developing the position of the market and a user base and changing people’s habits in a really fundamental way of telephoning, always accessing people.”
And after hearing the news The fact that Klarna doubled her losses in the last quarter, compared to a year earlier – partly due to people who do not reimburse their BNPL – Brittany loans wanted to know: are the BNPL companies or are technological companies? How should they be regulated and how will consumers remain protected?
Well – it’s always in the air.
Harris said that originally, BNPL companies did not have to comply with some of the regulations that most financial institutions make.
“They call it a disturbance, right? The disturbance is the pretty brilliant that you put on regulatory arbitration, because so many of these commercial models consist in pursuing a previously existing business model, but in dodging regulations,” said Harris.
“So Uber is an excellent example because Uber, during his first founded, was called Ubercab. And when they discovered that it would mean that they were subject to all these regulations whose taxi industry was subject, their strategy was to cut the name of the taxi. If they had been subjected to all the regulations of the industry, they could never have retired – the hotel should not have been To see a regulatory arbitration strategy to “buy now, pay later”.
But last year, the CFPB essentially said BNPL companies are credit card providers. This meant that these companies had to comply with the truth in the 1968 loan law. And now another key was launched after Trump came into office.
“They issuing A new interpretation in May of 2025 saying: “No matter about this other thing, we are not going to focus on” buying now, pay later ”, and in fact, we plan to repeal this interpretation, “said Harris.
And in the pastIf you have lagged behind BNPL payments, it was not going to be reported to the credit offices. But for a few months, Equifax, Experian and Transunion have been trying to change this. So, potentially, consumers are approaching a situation with BNPL where if you get payments, you could potentially end up with bad credit. And now, with changes to the CFPB – they might not have protection either.
But the rise of the BNPL could also be linked to what some have called The “subsidy of the lifestyle of the millennium”. Some technological companies – such as those mentioned by Harris – have been described using this sentence because for a long time, they offered services that we already had with a more recent, more practical and often cheaper model. But their prices were uprising For a while.
“I think that Klarna and Affirm and one of these other companies” buy now, pay later “are really like a solution to this problem: how to pay for the increase in costs that come with Airbnb and accompany Uber? And I think” buy now, pay later “ is a button that you can click at the end to facilitate the permission of these things ”, said Harris.
Harris said that subsidies in lifestyle are not new.
“We can consider the generation of boomer, for example, as strongly subsidized: by housing loan subsidies which have provided a whole generation of the cheap houses they can have, and government programs for the construction of motorways, a whole road complex that they could drive and appreciate. And we see all the lifestyle that is built on this, right?” Said Harris.
“There was an entire generation which behaved in relation to cars and the road system, and which was strongly subsidized by the decision of the State to build this road system. I do not think that we are the Uber generation because we loved making Ubers, we were the Uber generation because the capitalists saw an advantage of investing our lifestyle and tons of money in these cabin services, and And that changed our lifestyle. “
Who pays subsidies in the lifestyle when the bill is due? According to Harris, consumers are now dependent on the former cheap services. BNPL services can help people get in trouble repaying their BNPL loans.
If we can no longer afford Uber or Doordash as easily – even with BNPL – it could force us all to rethink the price of convenience (or to push us to relearn how to greet a taxi, or how to make our own burritos).
As for Brittany, she goes to a store to choose her next sofa – when she is ready to pay in full.