Buy now, pay later
Buy now, pay later (BNPL) is a type of short-term debt financing that allows consumers to make purchases while only initially paying for a portion of their value, postponing payment of the remainder of the debt until a future date, or dividing it into a series of installment payments. BNPL is generally structured like a hire purchase or installment plan money lending process that involve
Overview
Buy now, pay later (BNPL) is a type of short-term debt financing that allows consumers to make purchases while only initially paying for a portion of their value, postponing payment of the remainder of the debt until a future date, or dividing it into a series of installment payments. BNPL is generally structured like a hire purchase or installment plan money lending process that involves consumers, financiers, and merchants. Financiers pay merchants on behalf of the consumers when goods or services are purchased by the latter. These payments are later repaid by the consumers over time in equal installments. The number of installments and the repayment period vary, depending on the BNPL financier.
History
The earliest form of BNPL traces back to the 19th century, when installment plans emerged as a way for consumers to purchase expensive goods (e.g. furniture, pianos and farm equipment) they did not have the funds to buy outright.
Earlier examples and similar concepts
Sources discussing the topic.
Modern era and emergence of the industry
In the early 21st century, fintech companies developed systems that allowed installment plan lending to be integrated into the payment flow of online shops, allowing a consumer to receive instant credit at the point of sale and pay for a purchase later, based on an agreed schedule. The integration and instant processing elements are what set BNPL apart from other approaches to consumer lending. A 2021 survey by Mambu attempting to identify emerging 'financial tribes' in the banking world found that the use of online financial/banking services was expanding significantly amid the COVID-19 pandemic, and was likely to continue to increase thereafter. The model first found success in the fashion industry; online stores devoted to such offerings were among the first to accept and widely use low-cost BNPL techniques amid the pandemic. It emerged amid a massive outgrowth in advertising by Gen-Z influencers on social media. Website-building platforms such as Wix and Shopify allow merchants to integrate third-party payment providers that offer BNPL services at checkout.
Australia
Use of digital banking and payment services among Australians increased significantly over the course of the COVID-19 pandemic. Yet this was a continuation from trends seen prior to it, and it's likely that its consequences served to hasten existing processes. Between 2017 and 2019, the total value of BNPL transactions in Australia increased dramatically. By 2021, nearly 20% of Australia's 10 million BNPL users had missed a payment on a loan. Afterpay and Zip Co accounted for more than 60% of the market in Australia by March 2021, according to a Survey from Finder. An earlier UBS report had suggested that up to 18 percent of AfterPay users were also on JobSeeker, a government unemployment benefits scheme, though this was later refuted by Afterpay, whose internal study showed less of their userbase registered with the program than the national average. A 2021 survey by Statista found that roughly two-thirds of Gen Z Australians had used a buy now pay later service in the six months preceding the study. Data released by the Reserve Bank of Australia and Parliament showed the two platforms shared more than 5 million Australian and New Zealander users between them in 2020, and they were available at 53,000 and 30 thousand merchants respectively. A year later, the BNPL userbase sat at 10 million in Australia alone. A 2021 Mambu survey found that nearly 24% of Australians reported regular use of BNPL for online shopping, the highest of any country surveyed. It was initially only offered as an online service in the country, but began to spread to 'point-of-sale' locations in the late 2010s and early 2020s. It was reported in September that young Australians were taking increasingly extreme measures in order to make payments, including skipping meals. In 2021, Australia had the largest uptake in BNPL usership of any country, with 38% of Australians reporting BNPL usership by March 2022. By 2023, use of BNPL had grown at an exponential rate. The total value of BNPL transactions in Australia was estimated at nearly $20bn, with nearly 50 million transactions taking place. The former represented a doubling, the latter a tripling, in usage compared to 2020.
India
In India, BNPL is considered similar to the country's traditional paper-based Udhar Khata system, where corner shops, known as kiranas locally, kept manually logged credit ledgers to allow their customers to buy provisions on credit and repay them later.
Indonesia
The existence of BNPL in Indonesia began in 2016 when fintech platforms from the E-Commerce and ride hailing sectors launched proprietary BNPL systems as an alternate form of payment. These platforms are referred to as pinjol or pinjaman online. Its initial success was attributed to poor credit penetration among Indonesians. Many such services act as revolving credit, where users are free to withdraw recurrently so long as they remain within the lending limit; early repayments increase the user's borrowing limit. Currently, there are 96 registered BNPL providers, 7 of which are Sharia-certified. In June 2025, OJK reported that pinjol still made up less than 0.3% of the total Indonesian credit market, yet its growth was higher than other forms of debt instruments, reaching 30% year-on-year, totaling up to IDR 22.9 trillion. The total number of pinjol registered accounts reached 15.4 million as of the first fiscal quarter of 2025. However, defaults among pinjol users increased at a higher rate than the growth of actual loan disbursement. In Q1 2024, out of the IDR 16.55 trillion in outstanding pinjol in West Java alone, IDR 650 billion were considered to be bad loans.
New Zealand
Buy now, pay later (BNPL) services became widely used in New Zealand during the late 2010s as e-commerce expanded and financial technology firms entered the retail payments market. Major BNPL providers operating in the country include Afterpay, Zip, Laybuy, and Klarna.
United Kingdom
In 2021, it was estimated that £4 in every £100 spent in the UK used buy now pay later mechanisms. At that time, roughly 3/4 of users were women, the same figure were under the age of 36, and 90% of financing was for fashion products. BNPL schemes at that time were not regulated.
United States
The COVID-19 pandemic and its aftermath produced a massive increase in BNPL transactions in the United States. The disproportionately broad-scale effects of the lockdown imposition and various debt relief efforts which followed may have contributed to a massive jump in transaction values, from $2 billion in 2019 to $24.2 billion in 2021. In 2020, buy now pay later financing as a payment method was offered in $97 billion (roughly 2.1%) of national e-commerce sales. This growth was driven principally by young consumers, who made up a massively disproportionate share of the emerging BNPL user market. In the same year, polling done by The Ascent found that nearly 45% of US adult BNPL users used BNPL services to finance services they wouldn't reasonably otherwise be able to pay for. It has been reported by the Consumer Financial Protection Bureau that more than 1 in 5 American consumers with a credit record had used BNPL services at some point in 2022, up from 17.8% in 2021. LexisNexis had received 95% more digital application screenings for BNPL services than in 2021, and had "directly observed 25% of U.S. adult consumers finance a purchase using BNPL" in 2022. BNPL lenders approved 78% of loan applications that year. Only 9% of overall consumers were using buy now pay later in the fall of 2023, though this represented a 40% increase from 2 years earlier, according to data from the Federal Reserve Bank of Boston. Multiple service providers, including Klarna and Affirm, described an explosion in the use of their services during this same period.
Present
In 2024, consumer credit balances (household debt) reached an all-time high, though have since declined in the first quarter of 2025. This has largely resulted from an economy-wide increase in credit card debt. Estimates from the previous year found that buy now pay later purchases comprised nearly $46 billion in transactions, roughly a third of the overall volume of American credit card debt that year. A 2025 LendingTree survey found that nearly a quarter of American BNPL users relied upon the service to finance groceries, up from 14% a year earlier, pointing to increasing economic pressure on US households. The same survey found nearly half of respondents had reported using a BNPL service at some point, with more than a third saying they had used it more than once. If accurate, it would represent anywhere from a near 33% increase to near doubling of usage of BNPL services in the country in the course of a year. News outlets have pointed to the increase in 'micro-loans' as a sign of stress amid rising prices and volatility in the US economy; others have argued that fears of a recession have driven interest in flexible, long-term payment options for products and services that consumers might not otherwise be able to finance. Experts are hesitant to label this an indicator of recession, though other observers have noted that the volume of American household debt is increasing, and the country's credit balance sits at a record high. According to a survey from the Federal Reserve Bank of New York, more than 40% of purchases made by financially-stable American borrowers in 2024 were valued at less than $250. Middle tier purchases were rarer, with loans between $1750 and $2000 accounting for roughly 18% of total purchases.
Usage and market functions
BNPL has been described as "similar to a credit card but without the hassles of an application process, card-swiping infrastructure, and separate limits for purchases and cash withdrawals". Unlike traditional loans, it is a 'point-of-sale' product, and offers immediate relief in the form of a short-term loan to any consumer willing to accept its terms. It has been presented as an option for those with low credit limits or who lack credit cards entirely.
Wikipedia contributors · Buy now, pay later · revision 1381470456 · CC BY-SA 4.0 · Plain text extracted and formatting adapted; tags derived from linked topics.