Despite growing scrutiny from regulators and warnings about rising consumer debt, buy now, pay later (BNPL) continues to resonate with consumers. A new survey found that many BNPL users view the payment option positively.
The study from HarrisX and the Financial Technology Association found that more than three-quarters of U.S. adults said BNPL allows them to split purchases into installments, helping ease financial strain.
BNPL is viewed even more favorably when compared with other credit products. Roughly three-quarters of respondents said installment plans were more beneficial to their financial well-being than high-interest credit cards.
Standing in Contrast
While the survey points to strong consumer support for BNPL, those findings stand in contrast to mounting concerns among regulators and analysts. One of the primary criticisms is that BNPL can encourage consumers to overextend themselves, particularly at a time when U.S. credit card debt remains at record highs.
Much like credit cards, BNPL has also drawn criticism for being used to cover everyday expenses like groceries and gas rather than larger, planned purchases. Since most BNPL loans are not reported to credit bureaus in the same way as credit cards, experts argue this growing debt burden can create a blind spot for lenders.
A separate LendingTree study suggests these concerns aren’t unfounded. More consumers now carry three or more BNPL loans simultaneously, and more than half of BNPL users said they would struggle to meet their financial obligations without them.
What’s more, the survey found that roughly 47% of BNPL users reported making a late payment on an installment loan during the past year, continuing an upward year-over-year trend.
Regulators Are Acting
These concerns have spurred regulators to take action. In the UK, for example, new regulations place buy now, pay later providers under formal regulatory oversight. The framework gives consumers greater visibility into BNPL agreement terms and establishes a formal process for escalating complaints. It also requires lender to access whether borrowers can reasonably afford their loans and to provide debt-assistance guidance to customers experiencing financial hardship.
In the U.S., New York recently proposed rules designed to implement similar customer protections. However, the state’s proposal goes a step further by potentially capping the fees that generate much of BNPL providers’ revenue.
Although regulatory efforts targeting installment lending are advancing in various jurisdictions around the world, they have yet to hinder BNPL’s growth—or diminish its appeal among consumers.