What: BNPL solutions are increasingly being used by distressed customers, for purchases ranging from groceries to equipment.

Why it is important: Goods ideas today can become nightmares the day after: will BNPL be one day subject of a warning from the US General Surgeon just like social media last May.

Buy now, pay later (BNPL) options, provided by companies like Klarna, Affirm Holdings, and Afterpay, have seen increased popularity, boosting sales for businesses. However, there are growing signs that consumers using these options are struggling, which could impact businesses.

BNPL options allow consumers to split the cost of a purchase into several payments over a few weeks or months, often with little or no interest. Despite a 14% growth in BNPL use for online purchases in 2022, there are indications that some users are struggling to make payments, with a significant increase in the use of BNPL for necessities like groceries.

BNPL users were also found to be more likely to have a delinquency of at least 30 days on their credit records. This trend could lead to a potential risk of default, impacting consumer spending habits and potentially affecting businesses offering BNPL options.

Buy now pay later boosts sales but also stress customers