Buy Now, Pay Later (Maybe)

By Arianne Cohen

March 25, 2026

As a concept, buy-now, pay-later plans seemed like a godsend. Following in the hallowed footsteps of layaway plans and credit cards, they arrived on the scene just as inflation was rising, as a way for consumers to buy more in a struggling economy. But depending on your perspective, BNPL may be either a boon or grave threat to retailers.

Purchasing with BNPL is frictionless: At the register, rather than tapping “cash” or “credit,” buyers simply tap the name of the buy-now, pay-later company, a financial institution. Moments later, the item is theirs... sort of. The retailer has been paid in full by the institution, so the buyer walks. Later, installment payments kick in. The transaction is interest-free unless the buyer misses a payment, in which case significant interest incurs. Unlike credit cards, BNPL is typically not used for groceries or jeans, but for big-ticket items, such as a fridge or exercise bike. “It’s people who are used to certain appliances, and all of a sudden the washing machine doesn’t work,” says Paco Underhill, founder of market-research company Envirosell, and author of Why We Buy: The Science of Shopping.

BNPL numbers are both enormous and alarming. US consumer debt broke the $18 trillion mark in 2025. Nearly half (45 percent) of consumers planned to use BNPL for at least one holiday purchase, an increase of 13 percent YOY, for an estimated $20 billion in holiday spending alone, according to figures from Adobe Analytics. But unlike credit cards, most BNPL services never run a credit check, so a consumer might hold a half dozen payment plans simultaneously. And—critically—BNPL debts are not centrally tracked, leading to no clear picture of consumer use.

Thus far, BNPL has been a boon for retailers and consumer-goods firms: Stores moved over $120 billion worth of products in 2025 that they might not have sold otherwise. “It’s good for retailers, especially in good times,” says retail expert Craig Rowley, senior client partner at Korn Ferry. But in the future? The doomsday scenario comes when the economy contracts and people are laid off—many of whom have recently bought appliances and dresses and cruises on BNPL. That’s the $120 billion question: Will they have enough money to pay the bill later?

It’s not looking great. A quarter of BNPL users have already made at least one late payment in 2025, up from 18 percent in 2023, according to the Federal Reserve. “It’s a testament to the number of lower- and middle-class families that are living paycheck to paycheck,” says Underhill. The question is how big those consumer debts can get before they stop people from shopping and drag down the industries that depend on consumer spending, like retail, restaurants, hospitality, and automotive. Only time—and the consumer-debt ceiling—will tell.

Photo credits: Vector, Stock Ninja Studio/Getty Images