Buy Now, Pay Later (BNPL)

BNPL services are offered at checkout by online and in-store retailers, through providers such as Klarna, Afterpay, Affirm and PayPal. A common arrangement splits the purchase into four equal payments over six weeks, with the first payment at checkout.

For example, a customer buying a 200 pair of shoes might pay 50 at checkout and three further payments of 50 every two weeks, with no interest.

BNPL providers usually make money from fees charged to retailers, which accept them because BNPL can increase sales and average order sizes. Some providers also charge late fees, and longer-term BNPL plans may charge interest.

BNPL is popular because it is quick, convenient and often interest-free. However, it carries risks. It can encourage overspending, and juggling several BNPL plans can make it hard to keep track of commitments. Missed payments may lead to fees, debt collection and, increasingly, effects on credit records. Because BNPL was originally lightly regulated in many countries, regulators have been introducing rules to ensure affordability checks and clearer information for consumers.