Last Updated on July 16, 2026 by Fiza Khurram
A $560 Billion Market Hiding in Plain Sight
Buy Now, Pay Later has become a checkout-page fixture, and by nearly every measure it is still growing fast. The global BNPL market reached approximately $560 billion in gross merchandise volume in 2025, up close to 14% year over year, with provider revenue estimated between $28 billion and more than $50 billion depending on methodology. In the U.S. alone, transaction value has grown roughly 20% annually since 2021, reaching an estimated $70 billion in 2025 still just 1.1% of total credit card spending, according to the Federal Reserve Bank of Richmond, but rising fast enough that regulators are paying close attention.
The Real Risk Isn’t What You Think
Conventional wisdom might assume BNPL’s biggest danger is a wave of defaults. The data doesn’t fully support that. Charge-off rates on BNPL loans have historically run comparable to, or even below, credit card charge-off rates — roughly 1.8% to 2.6% depending on the year and lender, against a broader consumer-debt delinquency rate of 3.5% in recent Federal Reserve data, with credit card balances transitioning to delinquency at a considerably higher 8.8% rate. Researchers instead point to a subtler problem: because BNPL loans, especially the popular “pay-in-four” model, have historically gone unreported to the major credit bureaus, they create what analysts increasingly call phantom debt obligations that are real to the borrower but invisible to every lender assessing that borrower’s next mortgage, auto loan or credit card application.
| Metric | Figure | Source Context |
| Global BNPL GMV, 2025 | ~$560 billion | Up ~14% year-over-year |
| US BNPL transaction value, 2025 | ~$70 billion | ~1.1% of total credit card spending |
| BNPL charge-off rate range | ~1.8%–2.6% | Comparable to or below credit card charge-offs |
| Users carrying multiple simultaneous BNPL loans | ~60–66% | CFPB and industry survey data |
| Users reporting at least one late payment | 34%–41% | CFPB research |
Loan Stacking: The Structural Blind Spot
The CFPB’s own research found that a large majority of frequent BNPL users roughly 60% to two-thirds carry multiple loans simultaneously, often spread across different providers, with no centralized system tracking a borrower’s total exposure. Consumers who use BNPL at least monthly carry meaningfully higher balances on other unsecured debt several hundred dollars more in personal loans and credit card balances than otherwise-similar borrowers who don’t use BNPL at all, though researchers are careful to note this doesn’t necessarily prove BNPL usage causes the extra debt; the relationship could run in either direction or reflect pre-existing financial pressure.
The Reporting Landscape Is Slowly Changing
Some of the largest BNPL providers, including Klarna and Affirm, have begun voluntarily reporting positive payment history to credit bureaus, a shift that could eventually let responsible BNPL use build credit rather than remain invisible. But the transition is uneven: most competitors still don’t universally furnish pay-in-four loan data, and even where reporting exists, it is often only for missed payments or accounts sent to collections — meaning the credit-reporting system still tends to record BNPL activity at the worst possible moment for a struggling borrower rather than reflecting a track record of successful repayment.
Regulation Is Catching Up, Unevenly
In the UK, new Financial Conduct Authority oversight of BNPL products takes effect in July 2026, introducing formal creditworthiness assessments, clearer fee disclosures and consumer protection requirements that have not previously applied to the sector. In the U.S., by contrast, the CFPB withdrew a proposed interpretive rule that would have applied Truth in Lending Act protections to pay-in-four products, leaving the regulatory landscape considerably more fragmented and leaning more heavily on state-level consumer protection law and voluntary industry practice.
The Bottom Line for Consumers
Federal Reserve researchers are explicit that BNPL’s direct threat to overall financial stability currently looks limited, given its size relative to the roughly $1.2 trillion U.S. credit card market and its comparatively low realized loss rates. But limited systemic risk is not the same as no risk at the household level. For individual consumers, the practical lesson is straightforward: treat every BNPL commitment as real debt on your household ledger, even though it may not show up when a bank checks your credit file and be especially cautious about stacking multiple instalment’s plans across different providers the one pattern that researchers consistently link to financial strain.