What does it mean for your business when how customers pay changes your value proposition and economic model?
A Federal Reserve analysis estimates that six major buy now, pay later (BNPL) providers originated $156.7 billion in U.S. consumer credit products in 2025. “Pay-in-four plans” accounted for $78.3 billion, nearly 80 percent more than the Consumer Financial Protection Bureau measured in 2023. Other short- and longer-term installment loans made up the other half of the market.
I’ve worked with many of the largest U.S. banks on their credit card products as part of my innovation consulting business. Many of these projects involved co-branded credit cards – consumer brands that partner with banks and credit card issuers to create cards with unique brand-based benefits. In almost all instances, the credit provided by the card was seen a benefit, allowing consumers to defer costs until their monthly statement.
The game has changed.
BNPL has often been seen as a checkout convenience. But now with the Federal Reserve study, it’s now more formally recognized as a broad family of financing products that can influence what customers consider affordable, when they buy, and what they believe they are committing to.
BNPL includes multiple models that can cause confusion
The Federal Reserve study analyzed the BNPL companies Affirm, Afterpay (owned by Block), Klarna, PayPal, Sezzle, and Zip. Their product mixes differ. But pay in four represented 15 percent of Affirm’s total issuance, 56 percent of Afterpay/Block’s, 29 percent of Klarna’s, 95 percent of PayPal’s, 100 percent of Sezzle’s, and 81 percent of Zip’s.
Across the six providers, 63 percent of 2025 issuance carried zero percent APR and 37 percent carried interest. The same BNPL label can now describe a four-payment, interest-free plan or a longer loan carrying interest.
That can be confusing for consumers. And when you’re trying to compete, that matters for your product positioning and value proposition as well.
The Associated Press recently described how consumers are now using BNPL for groceries, household bills, transportation, and rent. For some people, flexible terms help manage cash flow. It can also mean people are using it to cover rising living costs.
The distinction matters socially and strategically. A payment option can help someone afford a laptop or appliance. The same option used for food or rent may commit the consumer’s future income to something they already consumed. That’s putting people in a financial hole.
Payment Design Is Product Design
In my consulting work, I often see companies obsess over the product and customer journey, only to treat payment as an administrative step at the end. That logic no longer fits.
Customers view the purchase and everything that follows – including payments, returns, and refunds – as one single experience. When financing changes which offer a customer chooses, payment becomes part of the value proposition and the brand experience. And when financing creates confusion or a misunderstanding down the line, it can harm the perception of your company and product, not to mention your net promoter score.
Here’s how to approach this to ensure you’re not quietly harming your customer experience:
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- Decide if and where BNPL belongs. Set boundaries by product category, purchase size, and customer situation. Financing a durable appliance creates a different experience than financing weekly groceries.
- Show the full commitment. Make the total price, payment schedule, interest, and refund process as easy to understand as the installment amount.
- Measure what happens after checkout. Pair conversion data with repeat purchases, returns, financing-related support requests, complaints, and the time required to complete refunds.
- Treat the lender as part of your brand. Review the provider’s approach to affordability checks, cost disclosure, credit reporting, hardship assistance, and dispute resolution.
BNPL can expand access and help customers manage cash flow. It can also harm the customer experience, not to mention customers themselves. Both realities exist inside the same $156.7 billion market. And that’s your leadership opportunity.
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