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Buy now, pay later (BNPL) enables consumers to split purchases into several smaller, interest-free installments. As the digital user experience has evolved, this short-term financing method has gone from a niche form of credit to an e-commerce staple. What’s next for BNPL?
The Current State and Trajectory of BNPL Services
BNPL is growing exponentially because it is simple and effective. The application process requires relatively little information, and the deferred payments often have no interest. Lenders have touted this financing method as a safer alternative to conventional credit card debt. Even individuals with limited or subprime credit histories can take part.
Giving people the option to place an order now and pay for it days later takes advantage of instant gratification, incentivizing purchases. Statista projects global BNPL spending will increase by almost $450 billion from 2021 to 2026. As more online retailers offer this option, more consumers will see this payment option as legitimate.
This short-term financing method’s popularity is part of a broader engagement with the convenience of digital shopping. Online spending has continually increased as retailers have expanded their offerings and streamlined the purchasing process. Shoppers are increasingly seeking easier, cheaper checkout options.
Emerging Trends Influencing the Future of BNPL
Strategic partnerships play a key role in raising consumer awareness and driving adoption. BNPL lenders know this, so they have been connecting with thousands of well-known brands and expanding their offerings.
In March 2025, Klarna — a financial technology company offering BNPL services — partnered with DoorDash to give consumers more ways to pay for meals, groceries and retail products. The delivery platform’s users have three new payment options when financing their orders through Klarna.
The “Pay in 4” option divides the total into four equal interest-free installments. “Pay Later” lets shoppers defer payments to another date, such as when they get their paycheck. With “Pay in Full,” they immediately pay the full amount using Klarna’s payment platform.
A Klarna spokesperson said the fintech company only extends credit to individuals who can afford to repay, which is determined by performing a novel underwriting decision for each transaction. Every time they want to use Klarna to pay, their financial situation is verified.
This collaboration will likely be lucrative. DoorDash’s 42 million subscribers collectively spent $21.2 billion on orders in the fourth quarter of 2024 alone, helping the app close out the year with a $117 million profit. Similar partnerships will likely emerge as other brands recognize the value of BNPL.
Technologies Being Integrated Into BNPL Platforms
Strategic partnerships aren’t the only thing shaping the future of BNPL services. More lenders are adopting artificial intelligence, open application programming interfaces, blockchain and cloud computing technologies to improve and diversify their features. Integration typically aims to streamline credit assessment, reduce fraud or improve the user experience.
For instance, Klarna tapped into AI to offer 24/7 customer support. OpenAI estimated its adoption of the ChatGPT plugin could yield an estimated $40 million profit increase. Its reasoning was that chatbots took on around two-thirds of the app’s customer service interactions, resolving issues in a fraction of the time. They effectively took on the labor of 700 full-time staff.
If BNPL is to become a staple in e-commerce, fintech companies must use technology to diversify their features and offerings. Contactless payment, one-time virtual cards and app-based loyalty programs will be the foundation for interconnected payment platforms.
Technological Innovations Face Regulatory Hurdles
Industry experts expect United States and European Union regulators to enact increasingly strict rules governing data collection, consumer privacy and transparency. In many countries, the BNPL market remained unregulated for years. Fintech is no stranger to this legal gray area — open banking and decentralized finance are in the same position.
In 2024, the U.S. Consumer Financial Protection Bureau confirmed that BNPL lenders are credit card providers, giving consumers the same key legal protections that apply to conventional cardholders. They can now dispute charges and obtain refunds on returned products. Also, they must receive periodic billing statements.
The CFPB’s decision came soon after discovering the predatory reality of some BNPL schemes. It found that BNPL lenders approved 78% of loans among applicants with subprime or deep subprime credit scores. Moreover, 33% took out multiple loans simultaneously. Based on these findings, further regulations are likely.
Navigating BNPL’s Challenges and Opportunities
As more platforms adopt BNPL services, more fintech companies will realize the value potential of developing their own service. While competition is healthy in most markets, this short-term financing method is still largely unregulated, which poses a problem.
This market is still in its infancy. If a predatory business undercuts competitors to exploit customers, it could sour the concept for countless consumers. Further, although increased regulatory scrutiny is welcome in cases like this, excessive rulemaking could degrade the ease and convenience of BNPL.
Despite these hurdles, this alternative payment option is gaining traction since younger generations are credit card averse but cash-strapped. Just over half of 18- to 29-year-olds have at least one credit card, which is relatively low compared to 73% of 30- to 49-year-olds, 78% of 60- to 64-year-olds and 89% of those 65 or older.
On top of being debt-averse, Generation Z’s spending is relatively conservative. Its members typically use debit cards. The low-commitment alternative of being able to pay for a product days or even weeks after purchasing it is the ideal middle ground.
However, consistency is a key aspect of the user experience. Consumers want to be able to use the same convenient payment method at multiple touchpoints. As the Klarna and DoorDash partnership demonstrates, the potential for expansion into new markets is considerable.
What Does the Future of BNPL Services Look Like?
While no one can predict the future, the trends are relatively clear. Despite regulatory hurdles, BNPL is well on its way to becoming as prevalent as contactless payment and virtual credit cards. Its popularity could transform how consumers approach online shopping.
