Buy now, pay later (BNPL) services continue to grow in popularity, but recent survey data suggests repayment challenges are becoming more common among users.
According to a recent LendingTree survey, 41% of consumers who used BNPL services reported making a late payment on an installment plan within the past year. That figure represents a notable increase from 34% reported during the previous annual tracking period, highlighting a steady rise in repayment issues across the BNPL market.
Despite the increase in late payments, the survey found that most delinquencies were relatively short-lived.
LendingTree reported that 72% of consumers who made a late payment said their most recent payment was delayed by no more than a week.
While short delays may not immediately affect a consumer’s credit profile, they can still result in late fees and other account-related consequences.Â
The survey also points to changing consumer behavior in how BNPL products are being used. Historically associated with discretionary retail purchases and larger-ticket items, BNPL services are increasingly being used to cover everyday expenses.Â
Nearly 29% of BNPL users reported using installment loans to purchase groceries, up from 25% the previous year.
Additionally, 16% of respondents said they had used BNPL financing for restaurant takeout or food delivery purchases.Â
The findings suggest that many consumers are turning to BNPL as a cash-flow management tool. More than half of users (54%) reported using BNPL services to bridge the gap until their next paycheck. Meanwhile, 23% of borrowers said they were managing three or more active BNPL installment loans at the same time.
As BNPL adoption continues to expand, questions remain about how these loans fit into the broader consumer credit landscape. In May, a group of U.S. senators sent letters to Equifax, Experian, and TransUnion expressing concerns about the lack of consistent reporting standards for BNPL loans. The lawmakers noted that varying reporting practices across lenders and credit reporting agencies may create an incomplete picture of consumers’ overall debt obligations and credit risk.Â
The senators stated that there is currently no uniform method for handling BNPL data across credit reporting agencies. As a result, some BNPL providers use proprietary credit risk models, some rely on third-party assessments, and others do not participate in traditional credit reporting systems at all. The lawmakers argued that the lack of consistency may leave consumers uncertain about how BNPL activity affects their credit profiles.
At the regulatory level, oversight of BNPL products continues to evolve.
While the Consumer Financial Protection Bureau recently withdrew several guidance documents related to BNPL, individual states have begun implementing their own regulatory frameworks. States such as New York and California have introduced licensing requirements and interest-rate restrictions for certain BNPL providers, creating a growing patchwork of state-level regulations.Â
As consumer use of BNPL services broadens and repayment trends continue to be monitored, lenders, regulators, credit reporting agencies, and industry stakeholders will likely continue evaluating how these products fit within the evolving consumer finance ecosystem.
Author:Â Jennifer Evancic
Jennifer.Evancic@ResourceManagement.com
Jennifer Evancic is a third-party auditor valued by creditors and large organizations for her knowledge in call monitoring within the collections industry. With meticulous attention to detail and a firm grasp of regulatory requirements, she ensures compliance with clients’ criteria and state and federal regulations.
Jennifer audits collections calls, ensuring they meet client-specific criteria and comply with regulations, providing valuable insights and maintaining industry standards.
Beyond her auditing responsibilities, Jennifer takes the lead in organizing and facilitating monthly call calibrations. These sessions serve as a collaborative forum where clients and their vendors come together to discuss call monitoring results and address any findings or areas for improvement. Jennifer’s guidance fosters open communication and ensures alignment between clients and vendors, driving continuous improvement in collections practices.
Jennifer stays up-to-date with compliance and industry best practices by participating regularly in peer meetings, regulatory updates and industry webinars. This keeps her informed about emerging issues and ensures she remains a knowledgeable leader in collections compliance.
