Opinion: BNPL’s Growth Masks Rising Default Risk

Facilitating big-ticket purchases with instant, short-term financing options has long made sense.

Buy now, pay later (BNPL) plans, which are typically interest-free, allow people to spread out the cost of expensive items without applying for a traditional loan or running up an expensive credit card balance. When used as intended, BNPL can be a win for both borrowers and lenders.

But today BNPLs are routinely used for day-to-day purchases, such as supermarket staples and coffee drinks. Now meal delivery services have been added to the mix, and adoption has been swift.

Lenders need to be hyper-aware of how consumers are leaning on BNPL to manage basic and discretionary household expenses, and pull back before financial stress goes from opaque to clear. If you don’t, you risk accelerating defaults.

In 2025, consumers increasingly turned to BNPL to cover routine expenses like groceries, café drinks, and clothing. A year ago in March, Klarna partnered with DoorDash, making installment payments available for delivered (and fee-heavy) restaurant meals.

From a lender’s perspective, the appeal of making these plans ubiquitous is obvious. BNPL merchant fees typically range from 2% to 8%, compared with roughly 1.5% to 3.5% for credit cards. That higher rate allows lenders to generate revenue without charging customers interest. 

BNPLs also tend to increase order values. In 2025, the average order value increased by 20% to 40%. Adding a $15 appetizer to a meal delivery order is tempting when it only increases the installment tab by a few bucks. 

Then, when the resulting debt becomes overwhelming, it can even serve as an on-ramp to traditional lending products.

The risk emerges when BNPLs become a substitute for cash flow rather than a practical tool for planned purchases. The standard term for BNPLs of four payments over six weeks can appear harmless in isolation. When stacked, however, multiple payments can put a squeeze on tight budgets. 

Yet lenders generally have no visibility into how many BNPL plans a borrower is juggling at once. Most of these four-installment loans are not reported to major credit bureaus so aren’t factored into credit scores.

That leaves lenders effectively blind to a growing portion of a borrower’s real obligations. You’re aware of the BNPL loans you’ve facilitated, but you don’t know about the loans from other lenders. 

When BNPLs are used for discretionary or durable goods and the person’s credit rating hasn’t slipped, you may feel comfortable — at least for a while. But if the person does start to use BNPLs for recurring living expenses because they can’t afford them, it becomes a serious underwriting risk.

You may be extending credit to borrowers who are far more leveraged than your models suggest.

As BNPL use expands into daily living expenses, more users are falling behind. Recently released LendingTree research shows 41% of BNPL users say they paid late on at least one loan in the past year, up from 34% who said the same the previous year. 

Because lenders continue to approve these transactions, and because BNPL obligations remain largely invisible, borrowers may not even recognize how strained their finances have become until they miss payments or default. Nor will lenders. 

By then, the damage is already done.

Regularly using BNPL for essential budget line items is a red flag. If consumers don’t have the cash to pay for these items at the time of purchase, something is already off in their finances.

Normalizing these loans for everyday necessities creates a compounding problem. If this week’s grocery bill is split into installments, next week’s bill becomes even harder to manage as future income is already spoken for. What starts as flexibility quickly turns into financial drag.

The LendingTree data backs this up:

• Nearly 1 in 4 BNPL users report having three or more active BNPL loans at the same time. 
• 25% of BNPL users say they’ve used it to buy groceries, up from 14% just one year earlier.
• Nearly two-thirds say they would consider using BNPL for food delivery
• 33% say they use BNPL as a bridge to their next paycheck

That last statistic should give lenders pause. Do you really want borrowers to view BNPL as a stopgap for essentials in addition to their discretionary spending? The more that behavior is enabled, the more normalized it becomes.

There’s a meaningful difference between breaking the cost of a $1,000 laptop into four $250 payments and stacking installment plans just to eat.

A January 2026 academic review, “The Psychology of BNPL: A Systematic Review of Impulsive Buying and Post-Purchase Regret,” found that BNPL lowers payment salience, increases perceived affordability, and encourages impulsive behavior through deferred payments and urgency cues. 

The most common outcome cited across studies was post-purchase regret.

That matters. Do you want borrowers to associate BNPLs with convenience and control or with overextension, stress, and remorse? Products that feel overly seductive in hindsight don’t build long-term trust or loyalty. 

I have heard too many people with massive credit card obligations blame account issuers for allowing them to charge more when they should have been cut off. Misplaced blame, but blame nonetheless. 

At the end of the day, it’s worth asking: Do you really want to make it easier for people to descend into debt when they order a burrito?