What does it mean for your business when how customers pay changes your value proposition and economic model?
A Federal Reserve analysis estimates that six major buy now, pay later (BNPL) providers originated an estimated $156.7 billion in U.S. consumer credit products in 2025. “Pay-in-four plans” accounted for $78.3 billion, nearly 80 percent more than the Consumer Financial Protection Bureau measured in 2023. Other short- and longer-term installment loans made up the other half of the market.
I’ve worked with many of the largest U.S. banks on their credit card products as part of my innovation consulting business. Many of these projects involved co-branded credit cards – consumer brands that partner with banks and credit card issuers to create cards with unique brand-based benefits. In almost all instances, the credit provided by the card was seen a benefit, allowing consumers to defer costs until their monthly statement.
The game has changed.
BNPL has often been seen as a checkout convenience. But now with the Federal Reserve study, it’s now more formally recognized as a broad family of financing products that can influence what customers consider affordable, when they buy, and what they believe they are committing to.
BNPL includes multiple models that can cause confusion
The Federal Reserve study analyzed the BNPL companies Affirm, Afterpay (owned by Block), Klarna, PayPal, Sezzle, and Zip. Their product mixes differ. But pay in four represented 15 percent of Affirm’s total issuance, 56 percent of Afterpay/Block’s, 29 percent of Klarna’s, 95 percent of PayPal’s, 100 percent of Sezzle’s, and 81 percent of Zip’s.
Across the six providers, 63 percent of 2025 issuance carried zero percent APR and 37 percent carried interest. The same BNPL label can now describe a four-payment, interest-free plan or a longer loan carrying interest.