Buy Now, Pay Later has become a checkout button that feels almost irresistible: get the item today, split the cost, and move on.

For shoppers facing higher everyday prices, that flexibility can seem like a lifesaver. Yet the same ease that keeps carts moving can quietly stack obligations, turning a short-term perk into a long-term headache.

Why It Booms

BNPL thrives because it blends convenience with psychology. Breaking a purchase into four or more installments makes the price feel smaller, even when the total is unchanged. That “now” reward can push shoppers to upgrade, add extras, or buy sooner than planned. During peak shopping periods, the effect is amplified as promotions and limited-time offers pile on pressure.

Retailer Lift

Merchants like BNPL because it can raise conversion rates and increase basket size. Payment providers frequently report higher average order values when BNPL is offered, since shoppers feel less friction at checkout. For retailers managing tight competition and cautious consumers, that boost is tempting. The risk is that a bigger cart today may create weaker customers tomorrow.

Merchant Fees

BNPL is not free for retailers. Third-party providers typically charge merchant fees that can exceed standard card processing costs, especially for categories with higher return rates or fraud risk. In practice, a retailer may pay more to win a sale from a customer who is already stretched. That can be a costly way to acquire buyers whose repeat-purchase potential is uncertain.

Thin Screening

A major concern is how easily many shoppers can open multiple BNPL plans. Some providers rely on lighter checks than traditional lending, and approvals can happen in seconds. When borrowing is frictionless, it’s easy to stack several installment plans across different stores. The result can be obligations that feel manageable individually, but stressful in total.

Usage Surges

Consumer surveys such as Bankrate’s Buy Now, Pay Later Survey have found that many users report at least one problem, including overspending or missed payments. More recent polls suggest many shoppers have tried BNPL at least once, and a notable share carry more than one plan within a year. That combination—growth plus repeat usage—raises the stakes.

Loan Growth

Cross-country analysis from the Bank for International Settlements (BIS) has described rapid BNPL expansion in multiple markets, alongside ongoing debate about how volumes are measured and compared. Digital analytics groups have also projected huge BNPL spend during major shopping weekends, showing how fast installment plans can scale.

Data Blind Spots

For years, many BNPL plans were missing from traditional credit files, making the debt easy to overlook—for shoppers, lenders, and household budgets. Reporting is improving as BNPL repayment data appears more often in consumer credit files, but coverage remains uneven. In the meantime, shoppers may not see a clear, single snapshot of everything owed and when.

When Trouble Hits

Problems tend to surface when cash flow gets tight. Consumer surveys consistently show a sizable portion of BNPL users report at least one issue: overspending, missed payments, regret, or difficulty resolving returns and refunds. Late fees and account restrictions can follow, and juggling multiple due dates can turn a simple plan into a calendar of stress. Ted Rossman, a consumer credit analyst, said that the most common BNPL pitfall is overspending—because smaller installments can make a purchase feel easier to justify.

Young Shoppers

Younger shoppers often lean toward BNPL because it feels more structured than revolving credit, and approvals can be easier for people with limited credit history. Yet research frequently finds higher rates of missed or late payments in these groups. The pattern is understandable: smaller cushions and volatile income make even “small” installments harder to absorb.

Returns Friction

Returns can be especially messy under installment plans. A refund might arrive after one or more payments have already processed, leading to temporary negative balances, delayed credits, or confusion about what is still owed. If a shopper returns part of an order, the installment schedule may change in ways that are not immediately obvious. Clear receipts and tracking matter.

Retailer Exposure

Retailers face reputational and operational risk when customers feel trapped. Even if a third-party provider technically owns the loan, shoppers often associate the frustration with the store. A wave of delinquencies can also reduce future purchasing power, shrinking lifetime value. In a slowdown, retailers may find that today’s BNPL-driven sales were pulled forward from tomorrow.

Smart Guardrails

BNPL can be used safely with rules. Keep installment plans limited to predictable essentials, not impulse extras. Treat the full purchase price as already spent and confirm every due date fits within the monthly budget. Avoid stacking multiple plans at once, and set automatic payments only if the funding account consistently stays above a safety buffer.

Conclusion

BNPL is powerful precisely because it makes spending feel painless. For retailers, it can lift sales; for shoppers, it can spread costs. But higher merchant fees, lighter screening, patchy reporting, and common payment problems can turn convenience into costly debt. Before clicking “pay later,” is the budget ready for every installment—no surprises allowed?