The checkout process has never been smoother. A few taps, a split-second approval, and a purchase that once felt out of reach suddenly feels manageable. No credit check. No interest, at least not right away. Just four easy payments, stretched across a few weeks. Buy Now, Pay Later was sold to the world as the sensible alternative to credit cards, and for a while, a lot of people believed it.
It’s worthwhile to take a step back and consider the true cost of that belief.
A study that examined more than 10 million banking records in the United States and was published in Management Science discovered something that shouldn’t be easily disregarded. In the months immediately after adoption, rather than years later, new BNPL users demonstrated quantifiable increases in bank overdraft charges, credit card interest, and late fees. Even after adjusting for demographics and spending patterns, the pattern persisted. The evidence points to a structural issue rather than merely individual carelessness. And that distinction is important.
The way BNPL is made to eliminate friction is part of what makes it so successful—and so dangerous. The approval is instant. It seems like a light repayment schedule. The screen displays the word “zero” in a friendly, bold font. According to consumer surveys conducted in Malaysia, the late fees are hidden among complex terms and conditions that are dispersed over several pages. Focus group participants in one study described the disclosures as “too wordy,” “very confusing,” admitting they mostly just wanted to “check out really fast.” That isn’t a weakness in character. That is a typical human reaction to an environment that has been purposefully created.
When you take into account who is actually utilizing these services, there is something concerning about that design logic. Data from Malaysia, where BNPL has grown sharply alongside a new regulatory framework, found that more than 70% of users come from lower-income households. Nearly half of survey respondents said they turned to BNPL simply because they didn’t have enough money. They weren’t making impulsive purchases of expensive goods. They were paying for groceries, school uniforms, phone bills. The math quickly becomes harsh when those payments are divided into installments and a fee is missed. For a product that is advertised as a lifeline, 44% of respondents said that late fees directly caused them to experience financial hardship.
It’s still unclear how much of this outcome is something BNPL companies could have anticipated versus something they quietly accepted. In separate surveys conducted in the United States, 70% of users said they spent more money through BNPL than they otherwise would have. For some providers, late fees and penalties accounted for 13% of their total revenue. That’s not a rounding error in the business model. It is a line of revenue. Although action has been sluggish and inconsistent across markets, regulators are beginning to take seriously the question of whether that makes the companies predatory or just apathetic.
One of the more significant attempts in the region to create genuine safeguards is Malaysia’s Consumer Credit Act of 2025, which calls for licensing, affordability assessments, and open disclosures. It’s a beginning. However, researchers examining its implementation have already identified gaps: providers are still free to choose what hardship assistance they provide, free dispute resolution is still scarce, and debt management services are not yet available to non-bank credit consumers. The framework exists. The teeth are still being fitted.
Watching this unfold across different markets, there’s a feeling that the broader conversation keeps getting pulled toward individual blame — people who spend beyond their means, who don’t read the fine print, who should have known better. It’s a handy framing. It also misses what the data keeps showing: that the structure itself encourages overborrowing, that disclosures are designed around speed rather than clarity, and that the people most likely to be harmed are also the least positioned to absorb the consequences.
Buy Now, Pay Later isn’t going away. By 2025, the global market is expected to grow to a trillion dollars, and the services are now so ingrained in retail infrastructure that it would be extremely challenging to unwind them. But the version that exists today — lightly regulated, strategically opaque, quietly profitable from the fees of struggling users — is not the neutral payment tool it was introduced as. It’s a credit product that carries real risk, wrapped in the language of convenience. Much of the harm occurs in that gap between marketing and reality.
