Buy Now Default Later

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Buy Now Pay Later companies now have over half a trillion dollars worth of debt on their books according to estimates from industry groups.
An exact number is harder to track than something like total credit card debt because these companies are not required to record their lending practices in the same way.
Either way this is an especially concerning amount of money because by design “buy now pay later” “loans” SHOULD only last for eight weeks before they are paid off in a predictable instalment plan.
But new research (and company confessions) have revealed what you probably already knew… people aren’t really paying off their Klarna account, they are just using it as a new way to make their month go a little bit further at the end of their money…
Most of the largest Buy Now Pay Later companies are barely ten years old now, but in that time they have been able to scale rapidly thanks to a combination of generous investor funding, a tech bro attitude towards regulations, and a service that was appealing to people who didn’t want to go through a formal credit application process… for whatever reason…
The argument was that these companies weren’t giving out loans… They were just letting people split up their purchase into smaller payments made over a set time period, and if everything was done properly the users wouldn’t even need to pay interest.
But now after giving out quick, easy “not-loans” to anybody who could download an app, the companies are pulling a shocked Pikachu that their “not-debt” is NOT getting paid back.
Now consumer debt defaults are on the rise everywhere, but BNPL has its own risks that could make this a whole lot worse than people not being able to split their Costco hotdog into 4 easy payments.