Buy now, pay later: Difference between revisions

'''Buy Now, Pay Later (BNPL)''' is a financing option for online purchases that allows consumers to pay for items in four installments. Companies such as [[Klarna]], [[Affirm]], [[PayPal]], and [[Apple Pay]] offer Buy Now, Pay Later loans at the check-out of online retailers, advertising four low payment installments. Because the lenders generally commit soft credit checks and offer interest-free installments within a short period,  BNPL is highly targeted toward those who have bad or no credit at all. It disproportionately affects vulnerable consumers, leading to major criticisms of predatory lending.

Credit card companies are legally obligated to report to the major credit bureaus such as Experian, TransUnion, and Equifax. Without reporting consumer information, BNPL lenders avoid common safeguards like spending limits, thus allowing consumers to accrue hundreds or even thousands of dollars in debt that otherwise wouldn't have been possible. This is particularly harmful because consumers tend to believe, and the lenders tend to advertise, that BNPL services are a safer option compared to traditional credit cards.

"BNPL lenders have access to the valuable payment histories of their customers. Some have used this collected data to create closed loop shopping apps with partner merchants, pushing specific brands and products, often geared toward younger audiences. As competitive forces pressure the merchant discount, lenders will need to find other sources of revenue to maintain growth and profitability. The Bureau would like to better understand practices around data collection, behavioral targeting, data monetization and the risks they may create for consumers"<ref name=":1" />.<!-- This is a direct quote from the CFPB page cited. Still needs to be re-worded/paraphrased and fit within wiki's voice -->

===New York's ''Buy-Now-Pay-Later'' Act===

On May 9, 2025, New York included in their budget legislation (Senate Bill 3008) the ''Buy-Now-Pay-Later Act'' (Article 14-B) to regulate BNPL lenders by requiring state licensure and other regulations<ref name=":2" /><ref>{{Cite web |last=Cover |first=Jason |date=29 May 2025 |title=Understanding New York’s New Buy-Now-Pay-Later Law |url=https://www.consumerfinancialserviceslawmonitor.com/2025/05/understanding-new-yorks-new-buy-now-pay-later-law/ |website=Consumer Financial Services - Law Monitor}}</ref><ref>{{Cite web |date=Jan 2025 |title=Senate Bill S3008C |url=https://www.nysenate.gov/legislation/bills/2025/S3008/amendment/C |website=The New York State Senate}}</ref>.

[[Category:Common terms]]