NEW YORK—A troubling sign is emerging in the buy now, pay later (BNPL) space, according to a new report.
LendingTree reported that while the number of consumers using BNPL has increased to 43% in 2022—a 12-point jump from 2021—of those who have used the services, 42% have had to pay some kind of late fee. Most BNPL purchases are for relatively small amounts.
“That’s a really big number,” said Matt Schulz, chief credit analyst at LendingTree, in an Acorns report. “That means an awful lot of people have paid late with these loans.”
In addition, said Schulz, it’s particularly worrying because, while the idea behind buy-now, pay later is not new, the solutions have only become widespread across online retailers in the past few years, Schulz stated.
If two in five people have already missed a buy-now, pay-later payment when delinquency rates are low, as they are today, it could suggest even more missed BNPL payments as rates rise, Schulz stated in the Acorns report.