Regulators in Washington may crack down on the industry behind “buy now, pay later,” the increasingly popular method for consumers to purchase things online.
The Consumer Financial Protection Bureau said Thursday that it is looking to “collect information on the risks and benefits of these fast-growing loans” from five leading BNPL companies: Affirm; Australia’s Afterpay, which is getting bought by Square owner Block; PayPal; privately held Swedish fintech Klarna; and Zip, another BNPL firm headquartered in Australia.
Shares of Affirm, which went public in January, plunged more than 10% following the CFPB news. Block (SQ) shares fell about 5%, but that drop may also have something to do with a lawsuit filed against it by tax preparer H&R Block (HRB). PayPal (PYPL) was down slightly.
“Buy now, pay later is the new version of the old layaway plan, but with modern, faster twists where the consumer gets the product immediately but gets the debt immediately too,” said CFPB Director Rohit Chopra in a statement Thursday.
New research from The Strawhecker Group analyzes key trends and consumer attitudes.
Download a free infographic covering several findings from the full report.
Consumers have increasingly adopted Buy Now, Pay Later (BNPL) services for multiple reasons; a desire for financial flexibility, a way to avoid incurring credit card debt, or to purchase items outside of their budgets. However, despite its popularity, consumer debt and missed payments have led to calls for additional research and regulation. Read the press release.
To take a closer look, The Strawhecker Group (TSG) conducted a survey of over 1,500 U.S. consumers in early 2021 with the goal of understanding domestic attitudes and perspectives on the use of BNPL services. The complete findings, a selection of BNPL provider profiles, and market landscape details can be found in the firm’s new report Buy Now, Pay Later: An Analysis of Key Trends and Consumer Attitudes.
Highlights of this extensive 81-page report include:
- Buy Now, Pay Later Background
- Key Players in the Buy Now, Pay Later Space
- Buy Now, Pay Later Consumer Survey
- Concluding Thoughts: The Future of Buy Now, Pay Later