'Buy now, pay later' might be driving up costs

Buy now, pay later — also referred to as “BNPL” for short — is a payment option that allows for customers to pay for a product in increments.

But while touted as way for customers to save as they eventually pay off their purchase, a recent report claims that BNPL might actually be impacting prices.

Published by consumer advocacy group Protect Borrowers, the report claims that BNPL lenders such as Sezzle and Klarna charge retailers quite the pretty penny; in fact, fees associated with their services can be up to three times the cost of those implemented by credit card issuers (a.k.a. “swipe fees”).

This — combined with other factors including late fees — could make BNPL services a costly expense for merchants, one that Protect Borrowers claims is being passed on to the consumer.

Trade groups for BNPL services, however, are calling bull.

“There is nothing to substantiate the claim that BNPL merchant fees are passed along to consumers,” Phil Goldfeder, CEO of the American Fintech Council, told Payments Dive via statement.

The Protect Borrowers report comes at a time when BNPL is growing in popularity: According to a recent LendingTree survey, 44 percent of Americans say that they expect to apply for a BNPL loan within the next six months. Gen Z and millennials are the most likely to consider such a loan at 49 percent.

LendingTree notes that 47 percent of respondents — nearly half, mind — admit they’ve been late with a BNPL loan payment within the past year. That number is up from the 41 percent seen in 2025, and the 34 percent seen in 2024.

This poses some serious financial issues for those behind on BNPL payments: 24/7 Wall St. states that late fees on BNPL can equate to an interest of 100 percent APR or higher. And as even more people use BNPL for essentials like groceries, financial experts are sounding the alarm on the potential drawbacks of the system.

“Americans deserve robust protections against predatory financial practices, junk fees, data privacy violations, and other harms posed by BNPL lenders,” the Protect Borrowers report states.

“Congress, state legislatures, and regulators have a responsibility to deliver these protections to working families who are increasingly turning to BNPL and other high-cost debt to make ends meet.”

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