TV-based shopping network QVC debuted its Easy Pay installment program in 1996. QVC’s payment program made it easier for consumers to purchase everything from everyday household goods to designer clothing and higher-priced items like laptops and vacuum cleaners. It enabled customers to split the bill, no matter how big or small, into multiple payments to be charged to their credit card over the course of several months, free of interest.
Fast forward a couple of decades, and Easy Pay's cool younger cousin, buy now, pay later (BNPL), is on a tear. This form of lending, which lets customers make purchases in multiple interest-free installments across multiple weeks or months, is attractive to customers for its flexibility and ease of entry, with no application or credit history necessary.
Consumer Demand Fuels BNPL Growth
BNPL usage continues to grow, particularly among younger consumers, and is increasingly a payment option that consumers expect. A January American Banker survey showed that 50MM consumers have used BNPL plans over the past 12 months. Driven by customer demand, BNPL is showing up at in-person purchases of both goods and services, for everything from haircuts to pet food.
Its total transaction value has grown by about 20% annually since 2021 to an estimated $70B in 2025, or about 1.1% of total credit card spending. The number of loans and the average size of each loan have both grown, from 19.8MM loans originated in 2019 to 335.8MM in 2023 at an average value that’s gone from $111 to $131 over the same period.
Customers Forget — BNPL Is a Loan
Though BNPL is a handy tool for customers looking to reduce the burden of purchases, the structure of multiple payments can lead to worrisome consumer behavior. Users can easily forget that the product is a loan, and multiple purchases across platforms can add up quickly when paired with one-time expenses. Missed payments can mean interest charges, penalties, and a lower credit score.
At Educators Credit Union of Wisconsin, Chief Lending Officer Ashley Madala found that more than 46K of 150K members were using BNPL, and that common problems resulted. “Customers were losing track of the number of offers they had taken from various BNPL channels,” Madala says. With confusion around multiple plans, due dates, and payment amounts, many members became overdrawn when too many installments came out of their checking accounts at once.
How CFIs Can Stay Competitive and Manage Risk
BNPL is primarily associated with fintechs that premiered the product, but 43% of consumers overall, and 47% of consumers who earn at least $100K annually, are interested in using BNPL offered by their banks, rather than by fintechs.
In response to that interest, many large banks currently offer BNPL programs while most community financial institutions (CFIs) still don't. That may soon change as many CFIs plan to begin offering them in 2026 to stay competitive with fintechs and peer financial institutions.
Multiple Paths to Entry
Uncertainty around compliance, credit risk, and consumer protection are all factors slowing down adoption for CFIs. For those that are interested, there are multiple paths to entry that allow institutions to participate without building a BNPL program from scratch. These include:
- Embedded partnerships. A white-labeled BNPL platform from an external vendor can let a CFI incorporate a BNPL program into its offerings without building a program from scratch.
- Debit-based BNPL. It lets CFI customers either make a BNPL election at the time of purchase or make a debit purchase as usual and later elect to treat it as a BNPL transaction. Financial institutions generally offer this form of BNPL to customers who meet underwriting criteria for cash flow and account standing.
- BNPL checking accounts. A BNPL program can add flexibility to payments made through a checking account.
The decision won’t be the same for every CFI. For some, a BNPL program might support customer engagement and retention. For others, the operational and risk considerations might outweigh the benefits.
BNPL programs are growing quickly, and many CFIs say they hope to offer BNPL to their customers this year. Adoption remains uneven as risk, regulatory uncertainty, and operational considerations complicate the decision. White-labeled BNPL platforms, debit-based BNPL, and BNPL-enabled checking accounts are all lower-risk ways for a CFI to add BNPL capability.
