What: A piece on the situation of BNPL in the US.

Why it is important: Buy Now Pay Later has been worrying regulators for more than a year now, and retailers should fear a backslash from customers the moment they realize that BNPL’s main promise, which is to be different from more traditional credit options, is actually not true.

From 2019 to 2021, the total value of buy-now, pay-later (or BNPL) loans originated in the United States grew more than 1,000 percent, from $2 billion to $24.2 billion, the Atlantic reports. Any kind of goods can be bought with BNPL, from a sandwich to cardigans or OLED TVs.

This is especially popular for the younger class of customers, usually below 30, and who usually do not own a credit card already, as they watched how their parents sunk in credits in the 80s. However, and even though BNPL is a new packaging for credit, younger customers do not see it in that way and tend to use BNPL for hedonistic purchases. Social media help BNPL as influencers advertise the “zero interest lifestyle” which is equivalent to having “free money” in their minds.

However, an increasing number of customers are behind their repayments, which is increasingly worrying regulators. Because BNPL providers are not subject to the same scrutiny as banks, consumer protections are scant. The Atlantic argues that this is the beginning of a new credit crisis cycle about to burst.

Is Buy Now Pay Later a bubble about to burst?