The BNPL sector’s business model is under intense pressure. High energy and household prices are causing consumers to tighten their budgets, hitting overall spending but also heightening concerns that people using buy now, pay later will be less able to maintain payments. At the same time rising interest rates threaten to push up operating costs and allegations of insufficient transparency about debt and fees risks provoking a regulatory backlash.
“With buy now, pay later, there is a triple whammy for the companies,” says Aman Behzad, managing partner at fintech finance advisory firm Royal Park Partners. “You have lower revenues, rising costs and deteriorating loan quality.”