Wall Street Breakfast Buy now, pay later: A split decision
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Feb 13, 2026 Julia Ostian, an equity analyst who covers consumer finance, weighs in on Buy Now, Pay Later trends. She discusses who uses BNPL and the rising late-payment risk among younger shoppers. She compares Affirm and Klarna from an investment angle. Short, clear takes on how BNPL works, merchant economics, and the danger of repeat use.
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How BNPL Firms Make Money
- Buy Now, Pay Later (BNPL) services split purchases into smaller payments, often interest-free and with no credit check.
- Firms make money mainly from higher merchant fees that retailers accept to boost sales.
Younger Users Drive Higher Risk
- Younger adults use BNPL more frequently than older groups, with 19% of 18–29 and 30–44 having used it.
- Late-payment rates are highest among the youngest users at 32%, indicating higher repayment risk.
Frequent Use Can Overextend Budgets
- Multiple BNPL purchases in a year are common and may lead consumers to overextend budgets.
- The Fed warns that frequent BNPL use raises the risk of financial strain despite seeming convenient.