Who is Using Buy Now, Pay Later?

Profile of an emerging small-dollar credit market

Andy Spears
2 min readMar 27


Photo by Bruno Kelzer on Unsplash

The explosive growth of small-dollar credit product Buy Now, Pay Later (think products like Klarna, Affirm, Afterpay) has caused some concern among consumer advocates.

The products are not regulated like traditional credit products and they can, if overused, lead to a cycle of debt that is difficult to escape.

The question, then, is who is using these products and what would be the best protections for those accessing this new form of credit?

Jason Mikula at Fintech Business Weekly reports on the Buy Now, Pay Later market based on a recent survey conducted by the Consumer Financial Protection Bureau (CFPB).

Here are some key takeaways regarding BNPL users:

The report provides a descriptive analysis of demographic groups that are more or less likely to use BNPL.

It finds that renters, lower income, Hispanic, Black, and younger consumers are more likely to use BNPL.

MORE likely to be using other credit products as well:

In fact, BNPL users reported higher rates of using traditional credit products, like credit cards or personal loans, than non-users. A whopping 95% of BNPL users reported also having a traditional credit product vs. 86% of non-users.

BNPL users also reported significantly higher rates of account delinquency vs. non-users. They were more than 2.5x as likely to report having any product in delinquency, with 7% of non-users reporting an account in delinquency in the year prior vs. 18% of BNPL users having a delinquent account.

Ripe for Payday Predators

Finally, BNPL users are substantially more likely to be considered “underbanked,” as they show comparatively high rates of using “alternative” products like payday loans, pawn loans, and auto title loans.

A high share of BNPL users also report overdrafting their bank account — a full 42.8% of BNPL users reported at least one overdraft in the past 12 months, vs. 17.3% of non-users.

In short, while Buy Now, Pay Later CAN provide relatively easy access to small-dollar credit at rates that are comparatively better than payday loans, the profile of BNPL borrowers seems to suggest that these loans are adding to the burden borne by already overextended borrowers rather than alleviating a need for those not using other forms of credit.

As I’ve noted before, when people are using Buy Now, Pay Later products to purchase groceries, we’ve got problems.

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Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .