BNPL use and late payments spike

Buy now, pay later used to be the button people clicked for sneakers and holiday splurges. Now one local television report says 91.5 million Americans are using it for groceries, gas, and other routine bills, and nearly half say they were late on at least one payment in the past year. (10news.com) That shift changes what this kind of credit means. When a shopper splits a $120 jacket into four payments, that is one thing; when a family splits a tank of gas or a grocery run into four payments, it usually means cash is short before the next paycheck arrives. (10news.com) (newstalkzb.co.nz) The basic product is simple. A buy now, pay later loan is usually a four-part, no-interest installment plan with about 25 percent paid upfront and the remaining three payments due every two weeks. (consumerfinance.gov) (files.consumerfinance.gov) That design makes the cost feel smaller than it is. A $200 purchase turns into four $50 payments, which can look manageable on a phone screen even when several other installment plans are already lined up behind it. (files.consumerfinance.gov 1) (files.consumerfinance.gov 2) Federal data shows this is no longer a niche corner of finance. The Consumer Financial Protection Bureau said 21 percent of consumers with a credit record used buy now, pay later from at least one of six large firms in 2022. (files.consumerfinance.gov) Use also tends to cluster, which is where the stress builds. The same Consumer Financial Protection Bureau report found the average borrower took out 9.5 loans in 2022, and about 63 percent of borrowers had multiple loans open at the same time at some point during the year. (files.consumerfinance.gov) By December 2025, the Consumer Financial Protection Bureau said six large providers originated 335.8 million buy now, pay later loans totaling $45.2 billion in 2023. The average loan size in that market snapshot was $135, which is small enough to blend into household budgeting and large enough to hurt when several bills hit at once. (consumerfinance.gov) (files.consumerfinance.gov) The late-payment numbers in the new consumer survey are what make the headline hard to ignore. The San Diego television report says almost half of users made at least one late payment in the past year, which suggests the product is increasingly being used as a bridge over income gaps rather than as a convenience at checkout. (10news.com) The same pattern is showing up outside the United States. In Kaikohe, a town in New Zealand’s Northland region, residents told Radio New Zealand they were using Afterpay for gas, groceries, vet bills, and household goods because paying the full amount upfront was out of reach. (newstalkzb.co.nz) One resident described buying roughly $170 of groceries, a $148 tank of gas, and a vet bill just under $300 through Afterpay. Those are not discretionary purchases, and the amounts show how installment credit is moving deeper into the weekly cash flow of lower-income households. (newstalkzb.co.nz) This matters for merchants too, not just borrowers. When customers rely on short-term installment plans for essentials, stores get the sale today, but the local economy underneath that sale is telling you that more households are running with almost no spare cash. (consumerfinance.gov) (newstalkzb.co.nz) That kind of thin-margin household budgeting can spread outward. If more consumers are stretching grocery, fuel, and pharmacy purchases across several pay cycles, small businesses are more likely to see choppier demand, more sensitivity to price changes, and greater dependence on financing tools that keep transactions moving. (files.consumerfinance.gov 1) (files.consumerfinance.gov 2) The story here is not just that buy now, pay later is getting bigger. It is that a product built to smooth retail purchases is increasingly being used like a paycheck patch, and late payments are rising at the same time people are using it for food, fuel, and other basics. (10news.com) (newstalkzb.co.nz) (consumerfinance.gov)