BNPL: Growth, Risk, and the Next Test for Brands

How short-term sales lifts and clever marketing could create long-term brand challenges.

Before there was one-click checkout, tap-to-pay, and same-day delivery, there was something slower, clunkier, and in many ways, smarter.

In the 1970s and 1980s, if you wanted a stereo, an Atari, an appliance, or even did your Christmas shopping early, you might have put it on layaway. You made small weekly payments, chipped away at the balance, and only after the final payment did you take the product home.

It wasn’t glamorous, but it taught financial discipline: patience, planning, and the feeling of earning something you couldn’t immediately afford.

Fast forward to today, and that ritual has been flipped on its head. Buy Now, Pay Later (BNPL) promises the same accessibility, but with none of the waiting. Consumers take the goods instantly and worry about the payments later.

That inversion - ownership before completion - has reshaped consumer psychology, rewritten retail playbooks, and introduced new risks for both households and brands.

By 2025, more than 91 million U.S. consumers had used BNPL services, up 6% year-over-year [2]. The U.S. transaction volume is projected to hit $122 billion this year, double just a few years ago. Globally, BNPL transaction value is forecast to exceed $560 billion by 2028. What began as a pandemic-era curiosity is now mainstream.

But the story of BNPL isn’t simply about convenience. It’s about what happens when instant gratification becomes a business strategy, and what brands may risk when the bill inevitably comes due.

The Consumer Side: Seduction and Strain

BNPL thrives because it feels harmless. The pitch is simple: “Four easy payments, zero interest.” No credit card needed, no traditional loan paperwork. For many consumers, especially Gen Z and Millennials, BNPL feels like a budgeting tool … not debt. But that frictionless design hides deeper risks.

The Psychology of Small Payments

Breaking a $200 purchase into four $50 installments makes the expense feel lighter, even though the total cost is the same. Consumers underestimate cumulative debt when payments are fragmented; a cognitive blind spot BNPL providers rely on.

It’s no surprise then that 41% of BNPL users reported making a late payment in the past year, up from 34% in 2024 [3]. The “invisible debt” problem is accelerating: multiple small obligations stack across platforms, creating financial strain that doesn’t always appear in traditional credit files.

Everyday Purchases, Not Just Big-Ticket Items

BNPL began as a way to make aspirational purchases more attainable, like apparel, electronics, or furniture. But usage has shifted. In 2025, nearly one in four BNPL users reported financing groceries, up from 14% the year prior [4].

That’s a red flag. When short-term financing extends into everyday essentials, it’s no longer about convenience. It’s about survival.

Buyer’s Remorse and Return Cycles

The “split payment” model can encourage overbuying. Research shows that up to 70% of BNPL purchasers report buyer’s remorse and consider returns [5]. In categories like apparel, this translates directly into higher return rates, squeezing retailer margins and tying up working capital.

Generational Divide

  • Gen Z & Millennials: Embrace BNPL as a credit alternative, often citing distrust of traditional credit cards.

  • Gen X & Boomers: Still rely on credit cards but are increasingly aware of BNPL.

  • Higher-income households: Surprisingly, BNPL growth is fastest here, suggesting the trend is cultural, not just financial need [2].

The Invisible Stacking Problem

Unlike credit cards, many BNPL agreements don’t immediately appear on credit reports. A consumer might owe payments to three or four providers at once, each tied to different purchases and due dates. Without consolidated visibility, debt piles up silently; a problem for households, but also for brands when financial stress turns into negative association.

The Retailer Side: The Lift and the Hangover

For retailers, BNPL is seductive. Integration is simple. Fees are baked into margins. Conversion rates jump. Marketing teams lean on it to push higher-ticket items without scaring off cost-conscious buyers.

Case studies consistently show that BNPL boosts performance:

  • Average order value (AOV) increases 15–30%.

  • Conversion rates at checkout rise by double digits.

  • Cart abandonment drops sharply.

But the hidden costs are hard to ignore:

Returns and Buyer’s Remorse

One apparel retailer saw a 22% AOV lift after adding BNPL, but within two quarters, return rates spiked 12%. Post-purchase surveys revealed an increase in “buyer’s remorse” language; customers linking payment stress to the retailer, not the BNPL provider.

One-and-Done Customers

BNPL customers often splurge once and disappear. Repeat purchase rates among BNPL cohorts have been shown to lag non-BNPL buyers by 18% or more. Lifetime value suffers even as top-line revenue rises.

Service Costs and Brand Fallout

Even when the BNPL provider manages financing, frustrated customers often call the retailer. Payment disputes, refund confusion, and delayed shipments all land in the brand’s support queue. The cost is financial, but the impact is reputational.

Brand & Marketing Implications: Where the Risk Lives

BNPL isn’t just a finance issue. It’s a marketing issue, because it was marketing that helped normalize it.

Selling the Illusion

BNPL didn’t just happen; it was sold. “Four easy payments.” “Zero interest.” “Shop smarter.” Retailers and fintechs turned a credit product into a lifestyle pitch; campaigns that leaned emotional (“treat yourself,” “don’t wait”) rather than transactional. That framing positioned BNPL as empowerment, when in reality it often masked deferred debt.

Positioning Drift

When your most compelling marketing message becomes “affordable in four,” you’re training the market to buy on terms, not value. Premium brands risk eroding positioning, while mass-market retailers risk commoditizing themselves further.

Data Blind Spots

Most BNPL partners own the repayment relationship. Retailers may never see delinquency or dispute data, leaving them blind to churn and risk signals in their BNPL segment. This is a marketing blind spot as much as a finance one.

The Hidden Service Cost

Even when financing isn’t your responsibility, customers call you. Payment disputes, refund confusion, and delayed shipments land in your support queue. The financial cost may be small; the reputational cost is not. BNPL is marketed as convenience. But for brands, it’s often risk hiding in plain sight.

Toward Responsible Marketing

If marketing helped create this environment, it can help shape a healthier one:

  • Disclosures as part of the brand story: Show the true terms in plain language. Transparency builds trust.

  • Reframe loyalty: Reward sustainable purchase behavior, not just volume.

  • Brand-led guardrails: Marketing teams should set clear boundaries on how BNPL is promoted; choosing language, disclosures, and contexts that align with the brand promise, not just defaulting to provider templates.

 The Call for Strategic Maturity

The brands that win long-term won’t be the ones that push BNPL the hardest. They’ll be the ones that market responsibly. Recognizing that “easy payments” may lift sales in the short term but could erode trust in the long run. For CMOs, the real opportunity is not just adopting BNPL, but deciding how it is framed, disclosed, and integrated into the brand promise.

AI Acceleration: Targeting the Vulnerable

BNPL’s next phase is being shaped by AI.

Providers already use predictive modeling and alternative data to approve borderline borrowers in milliseconds. Real-time algorithms can target shoppers at the moment of maximum impulse, and in some cases, maximum vulnerability.

For marketers, this looks like precision. For regulators, it looks like predation.

Without guardrails, AI will turbocharge the very cycle BNPL critics warn about:

  • More precision.

  • More conversions.

  • More consumers borrowing against futures they may not be able to afford.

If your brand prides itself on customer experience, your BNPL governance should reflect that, not undermine it.

Banks and Credit Unions Enter the Fray

BNPL is no longer just a fintech experiment or a retail conversion tactic. Traditional banks and credit unions are rolling out their own versions; some as white-labeled partnerships, others built in-house. For consumers, this adds legitimacy, but it also blurs the lines between short-term installment plans and traditional credit. For brands, it means the competitive landscape is widening: you’re no longer competing only with Klarna or Affirm at checkout, but with the customer’s primary financial institution offering similar terms. Will BNPL be a growth driver for financial institutions, or just a different way to book the same revenue?

Economic Context: Debt on Debt

BNPL’s rise isn’t happening in a vacuum. It’s layered onto an already fragile consumer debt picture.

  • Household debt in the U.S. hit a record $17.9 trillion in late 2024 [11].

  • Credit card balances are above $1.3 trillion, with average APRs above 20%.

  • Student loan repayments resumed post-pandemic, squeezing younger households further.

BNPL adds a new layer: short-term loans that often escape traditional reporting, making risk harder to track.

The Groceries Warning Sign

When nearly one in four BNPL users are financing groceries, it suggests BNPL is no longer just about convenience. It’s become a coping mechanism in an inflationary environment. Masking fragility rather than addressing it [4].

False Demand Signals

When 43% of consumers say they abandon a purchase if BNPL isn’t offered, it tempts retailers to see BNPL as essential infrastructure. But if those sales are built on borrowed money consumers can’t sustain, the growth is illusory.

Regulation & Credit Reporting: The Reckoning

Regulators are catching up.

  • In May 2024, the CFPB proposed new rules to treat BNPL lenders like credit card issuers [9].

  • The FTC has flagged concerns about disclosures and consumer harm [10].

  • Equifax [6], Experian [7], and TransUnion all began incorporating BNPL data into credit reports in 2024.

  • FICO announced it will begin factoring BNPL into credit scores in late 2025 [8].

Global Context

  • UK: Draft rules treat BNPL like regulated credit, with affordability checks and standardized disclosures.

  • Australia: Moving toward mandatory credit checks for BNPL loans.

This means the “light touch” era is ending. For brands, that matters because BNPL performance will soon shape not only consumer wallets but also reputational narratives.

The Credit-Score Tipping Point

·         2025: BNPL data begins impacting FICO scores [8].

·         Gen Z: BNPL’s heaviest users will feel it most.

·         The same tool marketed as “budget-friendly” could now alter creditworthiness.

The C-Suite Playbook: Guardrails for Responsible Use

If you’re in the CEO, CFO, or CMO seat, here’s how to treat BNPL strategically:

  1. Audit the Experience End-to-End
    Don’t just look at conversion. Map the full BNPL journey, from checkout to repayment, and note where brand risk enters.

  2. Segment the Offering
    BNPL may fit for discretionary or seasonal items, but not for everyday essentials. Define use cases, not blanket offers.

  3. Track Beyond the Sale
    Monitor returns, repeat rates, and service complaints among BNPL users vs. others.

  4. Negotiate Data Visibility
    Push providers for aggregated repayment trends. Without data, you’re flying blind.

  5. Scenario-Plan for Regulation
    Assume disclosures, fee caps, and credit checks will tighten. Build contingencies now.

  6. Protect the Brand Story
    At the executive level, ensure BNPL fits the company’s strategic positioning. If “four easy payments” becomes the loudest message in-market, the brand risks being defined by financing terms instead of value.

Takeaways for Execs

·         Treat BNPL as a credit-linked brand exposure.

·         Build contingency plans for regulation-driven friction.

·         Monitor consumer sentiment. Once the narrative turns, it moves fast. 

We’ve Been Here Before

BNPL may feel like a new innovation, but it follows a long line of credit models marketed as empowerment. From store charge accounts in the 1950s to the rise of credit cards in the 1980s, consumers have always been promised easier access and greater flexibility, often with unintended consequences. By the 1990s, credit cards had become both a growth engine and a cautionary tale, as surging household debt reshaped spending habits and forced an industry reckoning. Even layaway, popularized during the Depression and revived in the 1970s and 80s at chains like Sears and Kmart, carried its own lessons in patience, planning, and risk.

The difference now is scale and speed. BNPL is delivered in real time, fueled by algorithms, and marketed as frictionless. That combination makes it less visible and potentially more volatile. Which is why, for brands and marketers, the lesson remains the same: the financial tool may evolve, but the bill always comes due.

Conclusion: The Bill Always Comes Due

Every generation is sold a new way to make the unaffordable feel affordable. The tools change. The risks remain.

BNPL isn’t inherently good or bad. It’s a tool. But like any tool, it can build or break depending on how it’s used.

Handled thoughtfully, BNPL can widen access, smooth conversion, and strengthen customer relationships. Handled passively, it can tether your brand to consumer debt and regulatory fallout.

The story of BNPL is about more than payments. It’s about the shifting relationship between consumers, brands, lenders, and regulators. From layaway counters in mid-century department stores to fintech apps on today’s smartphones, the tension remains the same: making the unaffordable feel affordable.

The difference now is scale, speed, and invisibility. The bill always comes due. The only question is whether brands will see it coming, or let it arrive as a surprise.

Even if BNPL isn’t part of your business, the lesson is clear: leaders can’t chase growth without weighing brand trust. Is your go-to-market strategy ready for the next wave of change?

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Sources

  1. CFPB – Consumer Use of Buy Now, Pay Later and Other Unsecured Credit (2025): https://files.consumerfinance.gov/f/documents/cfpb_BNPL_Report_2025_01.pdf

  2. Statista – Number of BNPL Users in the U.S. 2020–2025: https://www.statista.com/statistics/1239448/bnpl-users-us

  3. LendingTree – BNPL Statistics and Late Payments (2025): https://www.lendingtree.com/personal/buy-now-pay-later-loan-statistics

  4. Financial Times – US Consumers Turn to BNPL for Groceries (2025): https://www.ft.com/content/7d31e4c1-96d2-4c4a-8d63-65a0cf4f9f2a

  5. Forbes – BNPL Buyer’s Remorse Trends (2024): https://www.forbes.com/advisor/credit-cards/buy-now-pay-later-statistics

  6. Equifax – How BNPL Affects Credit Reports (2024): https://www.equifax.com/personal/education/credit/report/bnpl-credit-reports

  7. Experian – BNPL Loans and Your Credit Score (2024): https://www.experian.com/blogs/news/2024/05/bnpl-credit-reporting

  8. Investopedia – BNPL and FICO Credit Score Updates (2025): https://www.investopedia.com/could-your-bnpl-debt-impact-your-credit-report-heres-what-you-need-to-know-11760755

  9. CFPB – Proposal to Regulate BNPL Like Credit Cards (2024): https://www.consumerfinance.gov/about-us/newsroom/cfpb-proposes-rule-to-regulate-bnpl

  10. FTC – The BNPL Market and Consumer Protection (2024): https://www.ftc.gov/news-events/news/press-releases/2024/05/ftc-bnpl-market-study

  11. Richmond Fed – Household Debt in the U.S. (2025): https://www.richmondfed.org/publications/research/economic_brief/2025/eb_25-03

  12. Bankrate – BNPL Survey Results (2025): https://www.bankrate.com/credit-cards/news/whats-new-with-buy-now-pay-later

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Clint Allen