The Rise of Buy Now, Pay Later: Changing Consumer Spending Habits

As Amazon's Prime Day marks the start of the holiday shopping season, U.S. consumers are projected to spend a record $18.5 billion through buy now, pay later (BNPL) services in the final quarter of the year. This popular payment method has transformed online shopping, despite concerns about consumer debt.

With Amazon's Prime Day heralding the holiday shopping season, U.S. consumers are predicted to spend a record $18.5 billion using buy now, pay later (BNPL) services in the last quarter, according to Adobe Analytics.

BNPL services have surged in popularity after the COVID-19 pandemic accelerated online shopping, leading to $75 billion in spending in 2023, a 14.3% increase from 2022. Providers like Affirm and Klarna offer installment payment plans, enhancing consumer purchasing power. Despite low reported delinquency rates by the Financial Technology Association, the Federal Reserve Bank of Boston noted that a significant portion of BNPL users also carried credit card debt.

Data from Adobe Analytics revealed that $731.5 billion was spent online from January to September, with $57.6 billion of this through BNPL options. Although most users pay on time, consumer advocates highlight BNPL debt as an oversight in financial reporting, prompting CFPB to enforce new regulations for BNPL providers.

(With inputs from agencies.)