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Buy Now, Pay Later: The Gen Z Alternative to Credit Cards

Retail TouchPoints

Despite these consequences, these loans have brought an uptick in spending. A 2021 survey from the Strawhecker Group reported that 55% of surveyed BNPL users spend more than they would with other payment methods. Perhaps some of this can be attributed to the indicated installment price included in BNPL payment options — for example, at one online retailer, a Dyson hair dryer’s price ($430) is listed alongside “or 4 payments of $107.25 with Klarna.”

Like other loaning services, BNPL solutions must also consider how to mitigate debt risks for themselves and the retailers supporting their services. Their approaches for dealing with unpaid debt vary. Some, such as Apple’s upcoming Pay Later, will have a maximum loan limit of $1,000 per user. Others allow for users to take advantage of retailers’ return policies if their payments cannot be made. Many options will also suspend a user from making future purchases with their account until missed payments are made. These options ensure that retailers can minimize the risks of utilizing these services.