The BNPL Story Everyone’s Getting Wrong

Easy loans are luring millions of Americans into a dangerous cycle of debt. Young people, particularly college students, are being seduced by easy credit and instant gratification, spending money they don’t have on things they don’t need. This easy credit revolution threatens to create a cycle of credit overuse and spiraling debt.

Sound like the latest op-ed about buy now, pay later?

It’s actually the credit hysteria drumbeat we heard throughout the late 1980s and 1990s. The “easy loans” were from credit cards. Congressional hearings were held. Op-eds were written. Parents stressed out. The message was clear: credit cards would destroy consumer financial health and drag down the economy.

So, what happened? U.S. GDP grew from $2.86 trillion in 1980 to $10.25 trillion by 2000, more than tripling in twenty years. Consumer spending, helped by the expansion of credit card access, became the engine driving almost 70% of economic growth.

Credit cards allowed households to smooth consumption, make necessary purchases when needed rather than waiting months to save and respond to unexpected expenses without financial catastrophe. The credit revolution that was supposed to ruin us helped power decades of economic expansion.

Now it’s 2025, and the media has simply found a new villain: Buy now, pay later.

Instead of rehashing the same moral handwringing, let’s look at what’s actually happening. Most people are managing their money wisely, technology is opening new doors and expanding access and responsible credit use isn’t going off the rails.

It’s simply evolving.

When The Facts Are Anecdotes

Every few months, another doomsday article appears about BNPL services allegedly trapping vulnerable consumers into debt spirals.

The Wall Street Journal recently featured a Gen Z individual who racked up thousands in BNPL debt and now proclaims that everything about these services is predatory and dangerous. The New York Times followed with an in-depth feature about a young woman who accumulated $50,000 across multiple BNPL platforms and other credit products, complete with photos of her surrounded by designer purchases. Purchases fueled, she said, by her desire to keep up with the fashionistas she worked with.

These stories make compelling reading and encourage viral posts and social piling on. They also fundamentally misrepresent how virtually everyone actually uses these products.

PYMNTS Intelligence benchmark data on BNPL usage patterns over the last five years provides a data-driven narrative that these sensationalized stories obscure. Between 97% and 98% of BNPL users manage their obligations responsibly. Delinquency rates remain remarkably low according to Federal Reserve data and public disclosures from BNPL providers themselves. Installment products offered by “pureplay” providers and enablers, along with credit card issuers, serve as valuable budgeting tools for those who use them.

That makes BNPL far from the credit train wreck it’s made out to be. It’s a predictable, transparent and disciplined credit option that most people use carefully and sparingly. And people like using it, so they do.

When the media builds narratives around the 2% while ignoring the 98%, they’re not informing the public. They’re reporting so-called facts with anecdotes. It’s like yelling fire into a crowded theater when there is none.

Let’s talk about what the data really shows.

The Reality: Measured, Moderate and Mostly Traditional

Yet-to-be-released PYMNTS Intelligence data about the use of credit, including BNPL and installment payments from general-purpose credit card providers, paints a picture of targeted, moderate adoption. That’s even as the popularity of BNPL and installment pay-over-time options grows.

General purpose credit cards remain the overwhelmingly preferred payment method across consumer buying contexts. In non-grocery retail, nearly half of all consumers (47.9%) use traditional credit cards and 23.1% use debit cards. That’s nearly two thirds of everyone. In addition, only 8.3% of consumers use BNPL to purchase these products. This hierarchy of payment preferences contradicts the notion that consumers are abandoning traditional payment methods in favor of “reckless” BNPL alternatives.

The disparity becomes even more apparent in grocery purchases, where spending discipline is most evident. Only 3.8% of consumers use BNPL for grocery purchases, while more than 42% use credit cards and 31% use debit cards. This means that the vast majority of grocery shoppers use cards to buy their food. These figures reveal that when it comes to essential, routine purchases like food, consumers overwhelmingly rely on traditional payment methods they understand and trust.

That 3.8% BNPL figure deserves attention though.

Critics have also manufactured a crisis around BNPL use for groceries. But is there any fundamental difference between someone using BNPL to split groceries into three payments and someone using their credit card and paying the balance in full at the month’s end? When you do the math, as I have and have written about previously, the answer is no. In both cases, consumers are managing cash flow. One consumer gets rewards. The other gets the reward of matching her grocery bill to her paycheck with a finite payback period. That form of credit just happens to have a newer name. And BNPL is the more responsible credit product for the roughly half of credit cardholders who revolve their balances each month.

More broadly, PYMNTS Intelligence data finds that most shoppers simply don’t use BNPL products at all. In retail contexts, 56.9% of consumers don’t use any form of credit, a number that climbs to 64.7% in grocery shopping.

When consumers do use BNPL, their motivations are surprisingly sensible. PYMNTS Intelligence data shows that 23.4% of BNPL and installment users cite “scheduling flexibility” as their main motivation, nearly a quarter cite not feeling as though they are taking on debt (24.1%), nearly a quarter that they can better keep track of their personal financial situation (23.3%) and 32% point to “control over payment size.” These are the behaviors we associate with responsible consumers, people who want to know exactly how much they owe and when they’ll be done paying.

Not for the rewards. Not to buy stuff they can’t really afford. Predicable payback periods and amounts that put the consumer in control.

It’s also worth noting that consumers with credit cards also aren’t maxing them out. According to the NY Fed, total outstanding credit card balances sit at about $1.2 trillion against total available credit of roughly $5 trillion. That means roughly $4 trillion in unused credit capacity remains untouched.

Consumers aren’t exploiting what’s available to them whether they use traditional credit or alternative forms of it. Instead, they’re exercising restraint.

The BNPL User

Critics also love to say that BNPL “preys” on low-income consumers. PYMNTS Intelligence data reveals a more data-driven reality. For many lower- and middle-income households, BNPL is a safer, more transparent alternative to the credit options they’ve historically relied on like payday loans, cash advances, overdrafts or informal borrowing from family and friends. Or going without, which is an option that 48% of consumers say they would have had to choose but for access to BNPL options, according to PYMNTS Intelligence data.

Nearly two thirds (65%) of consumers who struggle to pay monthly bills used BNPL last year, not as a splurge mechanism, but as a cash flow management tool. Among those living paycheck-to-paycheck but able to pay their bills comfortably each month, nearly six in ten used BNPL in the past year to manage timing mismatches between income and expense.

For these households, splitting a $300 medical bill or a $400 utility payment over a few pay cycles can be the difference between financial stability and crisis.

The data further undermines common misconceptions. For purchases under one hundred dollars, 14% of consumers indicate that BNPL is the best payment method to use, suggesting a focus on budgeting for routine needs rather than financing expensive luxury goods. This pattern directly contradicts media portrayals of reckless overspending on designer handbags, vacation packages and other high-ticket discretionary items.

Lower-income households, for whom BNPL is often a valuable and perhaps sole credit lifeline, prove to be the most judicious users. These households are often better at budget management than higher-income households precisely because they’ve had to be. There’s no cushion, no room for error, no bank of Mom and Dad to fall back on. Every dollar is accounted for. The notion that these consumers will suddenly abandon financial discipline the moment they access BNPL is both insulting and unfounded. Data showing similar rates of responsible payment behavior across income levels confirms this.

For consumers without access to traditional credit, BNPL represents responsible credit innovation at work.

Credit Isn’t the Problem. Choice Is the Solution.

What gets lost in all the handwringing over BNPL, and credit more broadly, is that people use all kinds of credit for all sorts of reasons. Some carry revolving balances. Some pay in full every month. Some pay the minimum when times get tight and catch up later. Some use BNPL for groceries. Some use it for occasionally bigger purchases. Some prefer the predictability of installments over the flexibility of revolving credit.

That’s exactly how it should work.

The beauty of 2025 isn’t that we’ve found the perfect payment product. It’s that we have more options than ever, engineered by both traditional players and new innovators who understand that different financial moments call for different tools.

Chase is testing Pay-in-4 on debit. Klarna has issued a Visa debit card in the U.S. Affirm’s partnership with FIS turns existing debit cards into Pay Later credentials. Sezzle offers rewards for the responsible use of Pay in 2 and 4. Major card issuers offer installment options for purchases made using their cards. Traditional banks and FinTechs alike recognize that consumers want choice and are demonstrating their commitment to providing those options.

That’s what healthy credit markets do. They evolve. And they use better tools to find the right risk and reward equilibrium. Particularly since no credit issuer is in the business of extending credit to those who can’t pay them back.

The Economics of Credit: Risk and Reward

Credit has always been about risk pricing and economic expansion. It smooths consumption across time, allowing purchases when they’re needed rather than waiting until sufficient savings accumulate. It helps families manage unexpected expenses without severe disruptions. BNPL is simply the latest iteration of this fundamental financial tool.

And every credit product reflects two sides of the same ledger: opportunity and risk. Merchants pay fees when accepting credit products because consumers want to use them to complete their purchases. And merchants want the sale. Issuers and providers underwrite consumers knowing that not every loan will be repaid. They price that risk accordingly.

BNPL is no different. If anything, it’s a newer, more efficient way of aligning risk and reward. Providers assess repayment risk, charge merchants transaction fees based on expected performance and offer consumers terms that fit within predictable repayment patterns. Consumers pay for access to credit products they want to use. The structure works because everyone in the system understands the economics. Merchants pay for conversion, issuers earn margins on responsible lending and consumers get credit on terms they are willing to accept.

Critics are right about one thing. BNPL’s uneven integration into credit reporting has created transparency gaps. But those gaps are closing quickly. Major providers like Affirm and Sezzle report repayment data to credit bureaus, giving consumers credit for positive repayment histories and adding accountability across the system. That evolution means BNPL will not only expand access but also help build credit for those who’ve long been invisible to traditional lenders.

Risk, Responsibility and Reality

New AI-powered budgeting tools are also making responsible credit use easier. BNPL providers are embedding spending insights and payment reminders directly into apps, helping consumers understand their “available to buy” and payment amounts and terms before they commit. For younger consumers who manage money digitally, these integrations give them credit with guardrails.

BNPL lays the math out in plain view. A consumer can buy something for $200, knowing that they will pay $50 every two weeks and be paid in full in eight weeks. And they know that before they hit “buy.” There is no mystery. Just the predictability and certainty that a growing share of consumers value when choosing how to pay.

That transparency is one of the strongest forms of financial education we have. It teaches by doing. It reinforces the connection between spending and repayment in real time. For households managing rising costs and flat wages, that connection matters more than ever.

Fixed payments over fixed periods force discipline and planning. Consumers can’t roll balances indefinitely. They know exactly when obligations begin and end. For someone whose paycheck lands biweekly, knowing exactly what will hit when isn’t just convenient, it’s essential for managing cash flow. For the roughly 68% of Americans living paycheck to paycheck, data finds that predictability is stabilizing, not destabilizing.

Innovations in credit are making responsible credit use more possible and more widely accessible. It’s a structured agreement with a built-in finish line. That’s why delinquency rates are stable, and why most consumers describe these products as helpful, not harmful.

Of course, there will always be a small percentage of users who struggle with credit management, regardless of which products are available. These stories represent outlier behavior. Complex personal finance challenges that would manifest through any available credit vehicle, not product design flaws.

The BNPL Bottom Line

BNPL isn’t perfect. Then again, no financial product is. Some people will misuse it. Some people misuse credit cards by carrying balances they can’t afford. Some people misuse cash by making poor purchasing decisions. Some people misuse savings accounts by never building emergency funds.

The question isn’t whether every single person uses every single financial tool optimally. The question is whether the product creates value for most people while allowing for informed choice.

The consistent finding across decades of credit innovation and credit use is that most consumers use credit products responsibly. The economy grows. Financial products become more competitive. Access expands.

We’re living in a moment where technology and innovation, from both traditional banks and FinTech disruptors, are giving consumers more ways to manage money on their own terms. More transparency. More control. More alignment between income patterns and payment obligations. More alternatives to truly predatory products.

That’s something to celebrate.

That makes the real story then not about BNPL destroying consumer financial health, but about an ecosystem that’s finally giving more people the tools to manage credit the way they want to manage it. They are offered choice, transparency, and increasingly sophisticated options that meet them where they are, as well as the ability to move between those options as their personal financial circumstances permit.

The consumer isn’t just lucky to have these options. They’re smart enough to use them well. The data proves it. The economy reflects it.

The only people who seem surprised are the ones who keep betting against consumer common sense.

Until NEXT time.

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PYMNTS CEO Karen Webster is one of the world’s leading experts in payments innovation and the digital economy, advising multinational companies and sitting on boards of emerging AI, healthtech and real-time payments firms, including as a non-executive director on the Sezzle board, a publicly-traded BNPL provider.

She founded PYMNTS.com in 2009, a top media platform covering innovation in payments, commerce and the digital economy. Webster is also the author of the NEXT newsletter and a co-founder of Market Platform Dynamics, specializing in driving and monetizing innovation across industries.