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Buy now, pay later services are flourishing


‘Tis the season to buy. Or, increasingly, buy now and pay later.

Purchases through buy now, pay later platforms like Klarna and Affirm were up more than 20% from last year on Cyber Monday, according to a new report from Adobe Analytics. These are financial companies that partner with retailers to let customers pay in installments, usually without a credit check — like layaway, but you receive the product before you make all the payments.

Back when it was called layaway, people didn’t exactly brag about using payment programs. But today on social media, there are buy now, pay later video trends: TikToks with captions that say something like, “When you tell him you only spent $25 but that was just the first payment,” set to Taylor Swift songs.

Most of the uptick in buy now, pay later has to do with the pandemic explosion in online shopping, said Sheridan Trent, research analyst at The Strawhecker Group.

“If you’re doing more of your shopping online it presents more of an opportunity to use buy now, pay later,” she said.

There’s also the push this year to shop earlier instead of spreading purchases and finances out over the season. There’s also the economic uncertainty households have been facing during the pandemic.

“And so I think this seems like one way to try to keep a cushion in your account,” Trent said.

These payment programs can be a good alternative for some — as long as they keep track of payment schedules, Trent said. Otherwise, they may be hit with penalties.